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Last
week featured Ambassador Katherine Tai’s semi-annual appearance before
the two trade committees in Congress—House Ways and Means and Senate
Finance. As usual, major news was not committed, but, also as usual,
there were lots of questions, and both their and Tai’s answers were
occasionally enlightening.
The
main point of many of the questions, which came from both parties, was
that the administration’s policy is not sufficiently ambitious, and as a
result, important opportunities are being missed. The most succinct
comment came from Senator Maria Cantwell (D-WA), who picked up on Tai’s
explanation of U.S. policy goals but said it wasn’t enough: “I’m for the
labor rights. I’m for enforcement. I’m for capacity building. But why
can’t we be for opening market access right now and getting rid of
tariffs?” Others pointed out the administration’s reluctance to continue
free
trade agreement negotiations with the United Kingdom and Kenya, its
refusal to start them with anybody else, and the weakness of the
proposed Indo-Pacific Economic Framework (IPEF), where the
administration has ruled out discussions of market access, leaving
potential Asian partners asking, “What’s in it for us?” (The answer, so
far, is not much.)
In
response, Ambassador Tai gave no ground. Responding to a question about
IPEF, she said, “I disagree with the sense that it is not sufficiently
ambitious. In a lot of our interactions and conversations with our
trading partners in the Indo-Pacific, we have been making the case that
what we are trying to do in the economic framework for the Indo-Pacific
is new. It will include innovative elements—some innovative for the
region, some innovative for the trade policy conversation overall
because of the evolving challenges that we are
facing.”
Her
statements are not new, but the back-and-forth framed the policy issue
more sharply. The administration is trying to develop a new approach
that emphasizes labor and the environment and is not focused on market
access. Ambassador Tai’s comment that tariffs were a twentieth-century
tool, implying they were old and outdated, elicited the response that
our trading partners clearly view them as a twenty-first-century issue.
The
two sides in that debate are talking past each other. When members of
Congress talk about market access, they mean U.S. access to other
countries’ markets, not the reverse. When Ambassador Tai says we
shouldn’t focus on that, she is thinking about other countries’ access
to our market and the political waves that would create rather than any
economic benefits.
Unfortunately,
that debate has more to do with politics than economics. To put it
simply, the administration is afraid of its own left wing and is
unwilling to take any trade actions that might restart the intra-party
fights that previous free trade agreements launched, particularly the
Trans-Pacific Partnership (TPP). In contrast, legislators remain focused
on market access and lament the opportunities they see being missed.
The
result, in addition to cranky members of Congress, is the most
risk-averse trade policy we have seen in decades. It is dressed up in
discussions about “new tools” and a trade policy for workers and the
middle class, but the administration has yet to put much meat on those
bones. Even discussions of new tools—a good idea, by the way, if anybody
can find some—end up being largely about sharpening the old tools, as
in the trade law amendments now incorporated in the House COMPETES Act,
which Ambassador Tai more or less endorsed
last week. They are good
proposals, but they are, as Ambassador Tai pointed out in one of her
more quotable comments, surgical tools, and not everyone needs surgery.
This
debate is likely to come to a head over the IPEF because the Asian
countries are already telling the administration what CSIS’s Matthew P.
Goodman, Emily Benson, and I said in our January paper—that
they need to see tangible benefits, and that a framework which consists
entirely of U.S. requests is not going to get very far. That means the
administration
is either going to have to take some risks and propose things that might
be unpopular with progressives. or continue along a track that will
either fail, or at best, produce a small agreement among the usual
suspects.
Even
that, however, will leave unresolved the internal debate on trade
policy in the Democratic Party. The administration has kept peace so far
through sustained risk-avoidance, despite public opinion polls that
show strong support for trade, even more from Democrats than
Republicans. By catering to its left wing, it flies in the face of what
the majority of its party wants and what will provide more jobs and
growth, not only for Americans, but for our trading partners. I have
said before that trade agreements have taught us that a rising tide
doesn’t lift all boats; it leaves some,
usually the workers’ boats, stuck in the mud. It is fine to try to float
those boats, but that will not mean much if you are not simultaneously
creating new tangible benefits for them. That requires risks, which the
administration has thus far refused to take, but, as Senator Cantwell
suggested, we ought to be able to be for labor rights, enforcement and
capacity building, and also for more market access.
William
Reinsch holds the Scholl Chair in International Business at the Center
for Strategic and International Studies in Washington, D.C. |