Biden Trade Chief Says Traditional Agreements Created Problems

(Bloomberg) — US Trade Representative Katherine Tai told lawmakers that some tariff-lowering agreements have made the US economy vulnerable, and the Biden administration wants to address the problem with a fresh approach to supply chains and commerce.

Tai, appearing before the House Ways and Means Committee on Friday, said tariff cuts and rules to meet free-trade agreement requirements have led to a de-industrialization and erosion of some US capabilities. 

That’s despite benefits in some areas like textiles in a free-trade deal with Central American countries, and agriculture in other accords, that have bolstered supply chains, she said.

The Biden administration hasn’t taken up any free-trade talks, opting to pursue its goals through initiatives that focus on issues like supply chains and the environment and don’t require congressional approval. Those include the Indo-Pacific Economic Framework and Americas Partnership for Economic Prosperity. 

Tai said that the administration was pursuing a trade policy driven by benefits to workers.

A number of the challenges to the US economy, including supply chains and competition from non-market economies like China, have roots in the “traditional trade approach,” she said.  

“We are not pursuing traditional fully-liberalizing trade agreements, because we see those as part of the problem that we are trying to correct for,” she said.

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For a second day, she listened to criticism from Republican lawmakers who faulted the administration for not negotiating new free-trade agreements. 

President Joe Biden’s predecessor, Donald Trump, was deeply skeptical of such agreements and in his first days in office withdrew the US from the Trans-Pacific Partnership negotiated for years under President Barack Obama and meant to counter China’s influence in Asia.

“What I am looking for is bipartisan partnership on trade policies that make the United States more resilient, our economy more sustainable, and our results more inclusive,” Tai said. “If this committee can show me the money that there’s bipartisan work we can do together, then let’s do that together.”

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While Republicans historically were the party more supportive of free trade, that stance eroded during Trump’s presidency with his focus on protecting American industries with tariffs and questioning the merits of deals negotiated under prior administrations.

Still, some Republican lawmakers have expressed disappointment that the Biden administration has abandoned talks with the UK and Kenya that began under Trump. Many of those lawmakers come from states dependent on agricultural exports, including Representative Adrian Smith of Nebraska, who leads the Ways and Means panel on trade.

Read more: Key GOP Trade Lawmaker Urges Biden to Seek Tariff-Cut Deals

More than a dozen Republican members of Ways and Means wrote to Biden on Thursday urging him to outline a  “clear trade agenda,” saying that the lack of new opportunities is putting the US at a disadvantage.

“To the extent that your focus on less traditional dialogues and frameworks is a result of a desire to avoid agreements that require congressional approval, we urge you to reconsider this approach,” the lawmakers wrote. 

They cited the US-Mexico-Canada agreement — the renegotiated North America deal championed by Trump that won broad bipartisan support in late 2019 and early 2020 — as a model.