Biden trade czar to explain post-Trump trade vision to senatorsEuropost
Katherine Tai, President Joe Biden’s nominee for US trade representative, on Thursday will explain to senators her approach to competition with China, rebuilding battered American supply chains and patching up strained ties with US allies.
At her confirmation hearing before the Senate Finance Committee, Tai will lay out her plans for enforcing existing trade deals and forging new ones that treat Americans as “workers and wage earners, not just consumers.”
Tai, who served seven years as the Democratic trade counsel for the US House Ways and Means Committee, said in prepared remarks that she would maintain a “healthy partnership” with Congress. She also previously served as USTR’s head of China trade enforcement and said that the United States needs a “strategic and coherent plan” for holding China to its trade promises and competing with Beijing’s state-directed economic model.
“China is simultaneously a rival, a trade partner and an outsized player whose cooperation we’ll also need to address certain global challenges,” Tai said. “We must remember how to walk, chew gum and play chess at the same time.”
She said this requires stronger, more resilient US supply chains and investments in people and infrastructure to boost American competitiveness.
“We must also impart the values and rules that guide global commerce -- and we must enforce those terms vigorously,” Tai said.
She said the deal marked an “important step in reforming our approach to trade” and its success was vital.
Tai’s testimony has been anxiously awaited for months by industry, US trading partners from Beijing to Brussels, labor groups and lawmakers - all lining up to lobby the Yale - and Harvard-educated daughter of immigrants from Taiwan.
After former President Donald Trump’s “America First” trade stance upended decades of trade liberalization efforts and heaped tariffs on hundreds of billions of dollars of US imports, many of these groups are pleading for a return to a more traditional view of trade as an engine of growth.
The US Chamber of Commerce on Wednesday called on Tai to back away from the “blunt instrument” of tariffs. As the trade “czar” for the world’s largest economy, biggest importer of goods and second-largest exporter after China, Tai will wield immense clout.
Once confirmed, she faces a long list of disputes left over from the Trump administration, from tariffs on steel and aluminum, aircraft and wine to threatened duties over digital services taxes and China’s lagging US goods purchases in a Phase 1 trade deal.
Here are the top issues:
EUROPE AND AIRCRAFT SUBSIDIES
Four US administrations have argued with Europe over past government aid to aircraft manufacturers since 2004. After WTO rulings, both Washington and Brussels put tariffs on billions of dollars of aircraft and food and wine imports.
The restaurant and the liquor industry will press Tai to reach a deal and lift these, while Boeing Co, the top US exporter, wants European tariffs on its aircraft lifted as it resumes deliveries of its 737 MAX.
Whether the United States or Europe should allow new subsidies on aircraft is another dilemma, and Brazil is now pushing for an agreement outside the World Trade Organization.
Broader US-EU trade talks, which previously stalled over agriculture imports, steel and aluminum tariffs, aren't likely a first priority.
REFORMING THE WTO
Tai will lead US efforts to reform the WTO, widely criticized for failing to rein in China's trade and subsidy practices. Reversing Trump opposition, the Biden administration has cleared the way for Nigeria's Ngozi Okonjo-Iweala to be director general on March 1.
One of Tai's first WTO decisions will be whether to back a temporary intellectual property rule waiver sought by India and South Africa to speed vaccine production in poor regions, potentially upsetting US industry. Okonjo-Iweala has warned against "vaccine nationalism" by rich countries.
The WTO's Appellate Body, a kind of a supreme court of global trade, was disabled after Trump blocked appointments of new judges. Tai is expected to review that decision but it could take time to rebuild the dispute settlement process.
WTO members missed an end-2020 deadline for a deal to cut subsidies that have helped decimate the world's fish stocks. Since its launch in 1995, the WTO has concluded only one new trade agreement. If this one comes together, WTO insiders joke, it won't be the WTO that will save fish, but fish that will save the WTO.
Britain and the United States started formal talks on a new bilateral trade agreement last year, after Britain's exit from the European Union.
The Trump administration floated a "mini" trade deal, but it is unclear whether Tai will seal it, or try for a more comprehensive agreement.
CONGRESSIONAL TRADE PROMOTION AUTHORITY
Tai will also lead negotiations with Congress to renew Trade Promotion Authority (TPA), the "fast-track" negotiating powers granted the US president that are due to expire on 1 July. Comprehensive trade deals are largely impossible without it.
Democrats who control Congress want new labor and climate change standards, as well as stronger congressional involvement in developing trade policy. As a congressional staffer, Tai chafed at Trump's actions to negotiate deals without consulting Congress.
DIGITAL SERVICES TAXES
Treasury Secretary Janet Yellen has vowed to dive back into multilateral negotiations on global taxation of tech firms that Group of Seven officials hope to wrap up by mid-2021.
Under Trump, USTR threatened tariffs on French goods over France's digital services tax, which Washington said discriminates against US tech firms. It also found similar problems in Britain, Austria and four other countries.
Tai's team also needs to evaluate the "Phase 1" US-China trade deal. China's purchases of US goods and services in 2020 fell 42% short of targets set in the accord.
US companies want China's industrial subsidies and non-tariff barriers removed, and intellectual property protections expanded, in exchange for easing tariffs on some $370 billion in Chinese goods.
Biden officials have said tariffs will remain in place for now, and have pledged to work with US allies to put more pressure on China to change what they call "abusive" practices.
JAPAN AND KENYA
US lawmakers and rice farmers, meanwhile, are pushing Washington to start talks with Japan about a comprehensive trade agreement after a less-than-satisfying mini-deal signed by the Trump administration.
The Trump administration also launched talks with Kenya on a bilateral trade pact that could serve as a model for additional agreements across the African continent.