How the Russia-Ukraine conflict is fueling Biden’s trade ambitions

“Over the last 40 years or so you’ve seen a kind of narrowing of the economic scores that we should be attributing to markets to really have a single focus on efficiency, excluding things like resilience, which we used to have on much more robust accounting.” , said the NSC economics official.

Biden’s team sees a new path in her worker-centric trade policy — one that not only creates new manufacturing jobs but supports working families by promoting unions and the right to organize so workers themselves can demand higher wages and better benefits.

This includes a “really full-bodied return to organized labor and unions,” the economics official said, and recognizing that markets “are driven by power dynamics, be it their economic or political power, and those are the things that shape market outcomes.” ”

Key to this agenda is rebuilding an industrial base in the US economy – lost through generations of American policies that encouraged companies to find cheaper labor abroad to supply cheaper goods to consumers. From the Department of Commerce to the NSA, Treasury Department and USTR, this goal unites a government that is often at odds on trade policy. Even Raimondo, arguably the most pro-business of economic policymakers, bases her stump speech on the story of how her father went abroad as a watchmaker when she was a child.

This unity in vision is largely due to the shock of the 2016 election. And perhaps the goals of the two presidents who have since moved into the White House are strikingly similar. During the Trump era, Commerce Chief Robert Lighthizer used to say that Americans were willing to pay a dollar more for a T-shirt if they knew it would support jobs in the States. In layman’s terms, that means sheer economics are no longer a priority, and veterans of both administrations say the continuity has been remarkable.

“Five years ago, the term industrial policy was a bad word in Washington, and now it kind of makes sense,” said Ivan Kanapathy, who served as director for China, Taiwan and Mongolia on the NSC staff from 2018 to July 2021. “But honestly, if you go back before the post-war period, we did a lot of it. We just have to flex those muscles and this is less about China and more about our own history.”

Biden’s trade agenda applies not only to domestic consumption but also to exports. In a reinterpretation of the goals of American trade deals, the White House team hopes to use trade pacts to persuade other nations to increase wages and environmental regulations, reversing the script of decades of US policies that have aimed at cheap labor and lax rules.

They see the US-Mexico-Canada agreement — the newly negotiated NAFTA that Tai herself led through the House of Representatives as a staffer on the Ways and Means Committee — as a model. And in some of Tai’s first actions under the agreement, she supported union campaigns at three auto parts factories, a novel use of trade enforcement to protect the right to organize in a foreign country. The action, USTR officials said at the outset, shows how the government is “putting workers first when it comes to how we think about trade”.

Should the White House ever end its self-enforced moratorium on new trade negotiations, Biden’s team wants to use the principles of the USMCA to build a network of like-minded nations that agree to support higher wages, tougher climate and environmental rules, and digital economy rules. Countries that don’t play by the rules — China, and now Russia — would be subject to higher tariffs and other trade regulations to persuade American companies to choose a more responsible business environment. In doing so, the team hopes to end the “race to the bottom” in global trade, with companies endlessly searching abroad for lower wages and looser regulations.

But that’s a big “if”. Chastised by Obama’s TPP experience and eager to demonstrate his focus on American paperbacks, Biden publicly suspended all new trade negotiations early in his presidency. That moratorium continues to this day, confining Biden’s trade team to settling Trump’s old disputes, such as steel and aluminum tariff deals with the European Union, Japan, and the United Kingdom. Even Biden’s major Asia policy initiative – the proposed Indo-Pacific Economic Framework – is strikingly unambitious from a commercial perspective. It is “not a trade deal,” as the White House has repeatedly signaled, and will be narrow enough not to require congressional approval.

This skepticism about new trade deals has frustrated many corporate interests who expected more from a Trump-Biden trade switch, particularly with regard to China. Many of them don’t believe in the idea that the age of unbridled globalization is ending and want tariffs to be eliminated and new markets for American firms to be negotiated abroad. But Tai’s recent visit to the Senate Treasury Committee gave Free Traders little hope of changing course, even provoked anger from some in her own party.

“I am for labor rights, I am for enforcement, I am for capacity building. But why can’t we work now to open up market access and abolish tariffs?” asked Sen. Maria Cantwell (D-Wa.), whose state is a large exporter. “The greatest economic opportunity for the US is to sell things outside of the United States. That means you have to act.” How the Russia-Ukraine conflict is fueling Biden’s trade ambitions

Fry Electronics Team

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