What maiden speech of USTR-elect says about Biden’s trade policy

Hello from Washington, where we’re still reeling from the violent riots in which a mob stormed the Capitol building. Donald Trump’s supporters — some of whom waved huge Confederate flags — marched through the building’s hallowed corridors in protest at lawmakers’ confirmation of Joe Biden’s win in the presidential election.

All of this has rather overshadowed trade policy — though we did have the outgoing US trade representative pull its punches on digital tax tariffs last week, which Alan Beattie covered earlier this week. Today’s main piece picks up US trade representative-elect Katherine Tai’s first speech since her nomination was announced. We unpick what it, and her appointment, might tell us about Biden’s trade policy. Our person in the news is Richard Trumka, who heads up the AFL-CIO union.

The clues in Katherine Tai’s maiden speech

Katherine Tai was one of the later batch of Joe Biden’s new cabinet officials to be picked, but she’s not been slow to get started. Tai, the chief trade counsel to the House Democrats, made her first big speech under her new guise as US trade representative-elect this week.

On the face of it, there was not much in it to surprise anyone who’s been paying attention to the Democrat debate on trade — there was a commitment to a trade policy that would “benefit regular Americans, communities and workers”, which started, Tai said, with “recognising that people are not just consumers” but also wage earners. Tai also portrayed the US as a country facing “substantial challenges in navigating and maintaining our values and our place in the world” — a dig at Donald Trump’s isolationist and transactional foreign policy. She also warned the US was facing “stiffening competition from a growing and ambitious China” — again, what one might expect.

But there were also some interesting signs of how Tai would handle her new role. That included a hint that enforcing the terms of existing trade deals would be a priority — specifically in the context of the new US-Mexico-Canada Agreement (USMCA), which, Tai noted, was “one of the few bipartisan legislative accomplishments of recent years.” The challenge, she said, “is to make sure that we continue to tend to this agreement; to nurture what is working, and to correct course when parties falter and stray from old and new commitments”.

So what might this all signal about the Biden administration’s attitude to trade?

First off, the appointment of Tai, who brings to the table a great deal of relevant experience, is a good sign for people who think trade policy is worth doing thoughtfully.

There were a lot of names in the running for this job, some more serious than others, and some belonging to people who had absolutely no background in trade policy whatsoever, but needed or were owed a job in the administration for purely political reasons. Biden has said he isn’t interested in trade deals. This has been widely interpreted as meaning that he’s not interested in trade policy per se — but Tai’s appointment would indicate that the incoming president’s position is not that simple. Which is welcome news for trade wonks.

Second, it indicates that the Biden administration’s stance on trade will be less pro-globalisation than previous Democrat administrations.

Tai is especially popular with progressive Democrats, who view her as a diplomat who is sympathetic to their views. Some among her supporters have in the past expressed strong views towards trade deals and — like her predecessor Robert Lighthizer — want to appeal to workers who believe that trade has depressed their wages and prioritise them above the corporations that have gained from them in the past.

Of course, Biden has not gone so far as to appoint someone too antagonistic — Tai has, for instance, credited business and labour for their co-operation in making the USMCA deal possible. But she has long had links to the labour union world and has already met with the major figures from it ahead of taking up the role.

Third, it signals that Biden is willing to listen to lawmakers on trade.

Lots of people have criticised the Trump administration for being too willing to use old-fashioned national security laws to pursue international economic policy while bypassing congressional approval. For example — the Section 301 tariffs on China, or the threats of Section 232 tariffs on German cars (which never came, but could have come without recourse to Congress). 

But many on Capitol Hill, including Democrats, point out that the reason Lighthizer has been so successful in securing some of Trump’s trade policy aims — such as updating Nafta, the trade deal between the US, Canada and Mexico — is because he understood how to operate on the Hill. This is no easy feat. It is a skill that Tai too is blessed with, and in her speech she made a commitment to work with Congress. Indeed, while much has been made of her background in enforcing trade law against China during her previous stint at in the late 2000s, when she was both a general counsel and then chief counsel for China trade enforcement, the more significant smoke signal may be her congressional heft. Trade Secrets has yet to find any Democrats on the Hill — apart from one or two who might have been in the running themselves at some point — who backed anyone else. This too should give US allies confidence that Tai is attuned to what US politicians will accept or reject when it comes to things that have to be approved by them — such as, for example, the upcoming US-UK free trade agreement.

As Tai said towards the end of her remarks, she has her work cut out. From contending with China to mending things with Europe, while dealing with tension over digital taxation and Airbus/Boeing, the Biden administration has much to do when it comes to trade. But we’re taking the appointment of a political animal who knows her stuff as a sign that he’s aware of just how serious and how tricky this area will remain.

Person in the news

Richard Trumka, president of the AFL-CIO, America’s largest union group, has said he will bring a labour dispute against Mexico under the US’s USMCA trade agreement once Joe Biden takes office. A complaint from the union would be the first major test of the deal’s labour mechanisms, which are designed to protect the rights of workers in Mexico and Canada. The union had been threatening to bring cases forward since September, but none have yet appeared.

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Source: Economy - ft.com