Tai Defends Biden Trade Policy

US Trade Representative Katherine Tai issued a strong defense Thursday of the Administration’s trade policy from complaints about the lack of free trade agreement negotiations.

Successive Administration’s focus on traditional free trade agreement has created the current situation of unstable supply chains and inequitable distribution of trade benefits, she argued.

“I hear all the time that because we are not doing traditional trade agreements, we are not doing trade at all. But if we look at what those agreements did, we see the ways in which they contributed to the very problems we are now trying to address” Ms. Tai told a program sponsored by the Open Markets Institute.

“Our focus has shifted from liberalization and the pursuit of efficiency and low costs – at any cost – to raising standards, building resiliency, driving sustainability, and fostering more inclusive prosperity at home and abroad,” she continued. “Like other aspects of the Administration’s economic policies, we are using trade to create a race to the top.”

Traditional free trade deal were based on a premise of efficiency and low cost, which allowed significant content to come from countries that are not even parties to the agreement, Ms. Tai said. “That means these rules benefit the very countries that have used unfair competition to become production hubs.”

Vulnerable Supply Chains
The result is that “supply chain rules in these FTAs tend to reinforce existing supply chains that are fragile and make us vulnerable. This does not make sense at a moment in history when we are trying to diversify and make them more resilient.”

What the Administration seeks “is a trade policy that fosters and creates opportunities for good and diversified jobs here in our communities, revitalizes US-based production at high, middle and low ends and puts workers back at the center because they are the foundation for resilience,” Ms. Tai stated.

Traditional trade policy historically focused on providing benefits for the largest companies, on the theory that those benefits would necessarily trickle down to workers, small businesses and communities. “But over time, what we have seen is that these benefits do not trickle very far down,” she said.

The Administration also is forging strong relationship with trade partners that share the same values, including to counter economic coercion by China. As an example, she pointed to the joint declaration with issued last week with Australia, Canada, Japan, New Zealand and the United Kingdom to send a clear message of unity against the use of non-market economic policies to build global market dominance.

Partnerships for Supply Chains
The partnerships being negotiated by the Administration, like the Americas Partnership for Economic Prosperity and the Indo-Pacific Economic Partnership are aimed at developing additional supply chains to prevent over-reliance on countries like China.

She also cited critical minerals agreements – like the one already completed with Japan, and those being negotiated with the European Union and United Kingdom – as another effort to create stable supply chains.

Ms. Tai also emphasized the importance of bringing developing countries into US supply chains. “We are turning the colonial mindset on its head. Instead of supply chains designed to extract from developing economies, our approach is to partner together, where we are all co-owners of different parts of supply chains.”

The chief US trade official concluded her remarks on an upbeat note, saying the Administration is pursuing “an unapologetically positive vision for building a tomorrow where all of us – including the most underserved and vulnerable – are more secure, more prosperous, and more equal.”