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Podcast: Biden Administration Part 1

Rethinking Trade - Season 1, Episode 22

President-elect Biden’s appointment of the next top U.S. trade official has taken on enormous political and symbolic value. In just a few weeks, the White House is going to look a lot different – but what about U.S. trade policy? On this episode, we examine whether the new president’s political commitment to fixing some of the worst aspects of the old corporate-rigged trade agenda will become reality, or if the office of the U.S. Trade Representative will function as a gateway for big corporations to write the rules.


Transcribed by Garrett O’Brien

Ryan: You’re listening to rethinking trade with Lori Wallach. Welcome back to Rethinking Trade everyone and welcome to the last full month of the Trump administration. In just a few weeks, the White House is going to look a lot different as will the world of trade policy. So today, we’re going to focus on a few things related to the new administration, from the people being tapped to lead it to some of the policy elephants looming in the room. Lori, let’s talk first about the Biden administration as it currently stands. As far as the future of trade policy, what positions matter the most? And what are you seeing in terms of personnel choices so far?


Lori: Well, what candidate Biden said was three things. First, he basically announced a moratorium on new trade agreements, which he just reiterated this week. He said that until there were major investments in US production, in healthcare, in training, there would not be any new trade agreements. And that’s right, because there needs to be a new US trade agreement bottle that builds off the new floor that the revised NAFTA set. He has said that he wants to greatly expand Buy American procurement, domestic preferences, and how the US government spends its money, which is the right thing to do. And to do that he also as a candidate said that he would fix the trade agreement rules that currently forbid this and make Buy American really mean “Buy American plus 60 other countries” who get waivers to Buy American and our tax dollars get offshored. So that’s something we’re going to need to watch carefully both that they don’t do new trade agreements, and that they fix the Buy American rules in the old trade agreements. And then the third thing he said he wanted to do is a variety of priorities relating to revitalizing the US economy, investments in infrastructure, health care for more affordable for more people, more affordable medicines, and a bunch of those things as well, his priority climate initiatives, run into some of the bad old corporate rigged rules of our trade agreements. So some of that stuff is going to have to get fixed. So with all of that is what they’ve said, then it’s who is going to do what, and the most single important job and the appointment that matters the most in the short term is the US Trade Representative that is a cabinet level appointment, and is an independent agency, and it’s the lead trade policy setter for any administration. And so far, they haven’t announced someone, there are some good candidates in the mix, everyone seems to think, who would be able to put forward a pro-people pro-planet agenda, but there are also some worrisome characters, and who gets that nod is going to be very symbolic, because it’s going to represent either a political commitment to fixing the old corporate rigged trade agenda, or if the wrong persons in that position, it’s going to be signal that it’s going to be a war. And there are huge policy and political implications for that, not the least of which is hard to imagine: a president who is a democrat who’s not prioritizing trade wants to get into a family feud with congressional Democrats, unions, and other base groups, and have a lot of them fighting with the administration against the administration about either a bad USTR choice or bad trade policies versus fighting side by side to try and promote the administration’s non-trade agenda. There are some other appointments that have already happened that are important. One of those is Treasury. So Janet Yellen is the number one, she is a little bit too much the standard view of economists typically on trade, not sort of focusing on all the non trade rules that undermine things ostensibly she would before. The deputy, the top deputy, is a guy who was in the Obama administration. His name is Wally Adeyemo, and he is a guy who Senator Elizabeth Warren has been praising, but my past dealings with him had him as a pretty strong advocate for the Trans Pacific Partnership. And having negotiated on behalf of Treasury, where he was Deputy Chief of Staff during the previous administration, during the Obama administration, the very weak provisions in the TPP that didn’t do anything to discipline currency cheating. On the other hand, he was also the guy who put his foot down and demanded that there was a limit on financial data transfers, so that Treasury could stay on top of fishy business if there was another financial crisis. So I would say the biggest thing to watch is if any of the really bad guys end up at USTR and probably number one in that list is a guy who’d love that job, who there have been a few news stories about maybe being thought about for the job. You knock me over with a feather if this comes true, but Rahm Emanuel, corporate hack extraordinaire, man who sat on tapes of criminal behavior of police in a police-related shooting in Chicago for a year, a man who I suspect if he got named to even dog catcher if there was such a title for the administration would probably cause street protests in Chicago, among other places. But Rahm Emanuel aspires to a new job in this administration, and, h having been effectively persona non grata in Chicago, so I guess he’s looking to move east again. And there are a lot of people considered persona non grata for this administration, but his name has been associated with the USTR gig, and that would be catastrophic.

Ryan: You already answered my next question, actually, when you were talking about Biden’s Buy America plans. So let’s just jump on to the sort of final question. This is sort of part two of the podcast, I suppose. When you were talking about Wally Adeyemo you mentioned the Trans Pacific Partnership. And we didn’t want to have to talk about this, but because it’s been in the news, we have to, and that is the Regional Comprehensive Economic Partnership or the RCEP a lot of news outlets have been talking about the RCEP as sort of China’s Trans Pacific Partnership, and they’ve been using that framing to suggest that Biden should try to rejoin the TPP. Or at least you know, the question is being asked, but this is not an accurate depiction of the RCEP. So my question for you, maybe you can tell me in the listeners, what is the Regional Comprehensive Economic Partnership? How does it differ from the TPP? And why is this framing of it so problematic?


Lori: Well, I’ll start with the last part, which is the same people who are trying to push us into the terrible corporate-rigged, job killing, big tech helping, medicine price increasing, environment destroying, climate disaster fueling TPP are just recycling their same old efforts. But their hope is somehow the Biden administration will not have learned the political lesson of how the Obama administration pushing TPP right through the presidential election helped make Donald Trump president, but also that most of what’s in the TPP directly contradicts what Biden has said is his priority domestic agenda. So what they’re basically, what the usual suspects, which are, you know, the usual corporate hacks and the lobbyists and the front groups that, you know, claim to be think tanks, who are cycling this stuff up and there are lots of op eds, lots of “Oh, no, we’re left behind.” They’re arguing their newest slice of this is to talk about this Asian agreement. So here’s the backstory. At the time that the TPP was started, some countries in a grouping called ASEAN, which is basically the Southeast Asian countries, it’s anchored with Malaysia and Indonesia and Vietnam and the Philippines and Thailand, they decided that they would, because they weren’t invited to TPP, they would have a negotiation that involved they’re having a free trade agreement with Japan, with Korea, and with China, who are the big countries in the region. And then they invited New Zealand and Australia as well. So there is some overlap between TPP countries and RCEP countries. But way back when the idea was these are going to be what they called two different kind of mega regionals. But it was never China’s agreement. It was the ASEAN countries agreement, so it was never going to be something exactly like the TPP because the ASEAN countries in the TPP were the ones who were saying, “hey, let’s not go so deep on all this non trade stuff.” So the RCEP was under negotiation even longer than the TPP. The RCEP was under negotiation for almost 12 years. And ultimately what happened last month, is they decided that they either could have a deal like the TPP that was dead on arrival and no country would or most countries wouldn’t implement. Or they could basically roll it way back. So the final deal looks nothing like a TPP or even what they had in mind with the RCEP when they started. It’s a lot more like a brand, a label, than a trade agreement. So to put this in perspective, unlike the TPP this agreement doesn’t get rid of all tariffs. It largely doesn’t even cover agriculture at all — the most contentious area where tariffs were zeroed out and TPP. It does not have Investor State Dispute Settlement, ISDS, which was the heart of the TPP. It does not have intellectual property rules, Big Pharma patent goodies and the copyright rules not in there. It has the most modest service sector rules not forcing countries to privatize and liberalize service sector. It does not have digital trade rules to lock big tech privileges in place and limit governments from regulating. Its main thing is it has common, what are called Rules of Origin, which simply has to do with what kind of product has what kind of test to see if it meets the terms of agreement is it the last step of processing has to be in one of the countries in the group? Or is it does a certain value has to be X percent of the value comes from countries in the deal. And you know, that’s something because all of those countries already have free trade agreements, this is not a big economic deal. In fact, the one country that could have actually made a big deal, which was India, quit the whole thing like a year and a half ago and just said, “We don’t even want part of this reduced brand.” So the other countries all have deals with each other. And even though this doesn’t really have much in the department of contents, the common rules of origin are really the only there there, which is why I really say it’s a brand. But you know, the folks who have been saying, “TPP we should do it” have been saying that all along. You know, frankly, if they thought they could get away with it, they would say we need to have TPP to avoid an alien abduction or a zombie apocalypse. I mean, they would make any damn argument. So, you know, to some degree, that the RCEP is a competing deal and we’re left out Heaven forbid or it’s China’s deal, that has as much validity as doing the TPP to avoid a zombie apocalypse. It’s just it’s a non sequitur goofiness. But of course, they’re gonna bring that up ‘cause you know, people know there is no zombie apocalypse. And people don’t know what those three initials are RCEP even mean. So that is something we’re going to need to stay on top of. My sense is politically, the Biden folks, even if they would be inclined to buy the bologna, understand this would be a political third rail that would undermine their domestic priorities and basically doom the Biden presidency from day one.


Ryan: And this is probably just the first example of many that we’ll see of attempts to reestablish the status quo corporate rigged trade policy set, in the Biden administration.


Lori: I mean, the reality is that if they want to use it, the incoming administration has enormous leverage on trade. The previous administration, US Trade Representative Bob Lighthizer, broke a lot of furniture. So at the WTO, with respect to China, there is a lot of leverage sitting there that this administration could use. It would be an enormous mistake if they just lifted the China tariffs, which thankfully, this morning, President-elect Biden said he wasn’t going to do or if they just decided, “let’s start appointing WTO tribunalists and get that system working again,” which so far, they have not said they’re going to do. But if they would do that, it would just be like, you know, it would be like having someone on third base with a known home run hitter at the plate, and then deciding that they would just, you know, basically, with all the bases loaded, decide to foul themselves out. I mean, it would just be a huge waste of potential leverage and ability to actually get some of the things done that working people and the planet need as far as trade policy. Now, the flip side of that is that having basically broken all the furniture and the world didn’t end, a Biden administration that wants to do the right thing inherits also from the Trump administration, a lot more policy tools. So everyone said when Lighthizer started doing things like tariffs on China, or jamming up the WTO, everyone said, “Oh, my God, it’s going to be the end, perhaps the earth will fall off its axis and hurl into the sun. Or at least we’ll have a major worldwide depression.” And these are the kinds of arguments that get made every time someone wants to do something to use trade policy leverage to try and actually change the rules. And Lighthizer did it. And he had the spine to do it. And all these horrible things didn’t happen, which basically demonstrates that if the right person is chosen for the trade representative’s job, then that person has a lot of leverage and has a lot of new tools to actually do the right thing. But you are spot on right, Ryan, that we are going to have to fight and keep the pressure on because, you know, there is a whole set of former Obama administration, former Clinton school people who are getting a bunch of top jobs. And you know, look, just at Secretary of State was a big, you know, “oh, we should be inside the TPP. If we’re not inside, then other people will write the rules.” That’s Tony Blinken. Now, I doubt he knows the rules basically favor China because I don’t think he’s going to be a total squish on China. But there are a bunch of people who have that mindset, that sort of State Department’s silo, “I don’t know what’s in there. But I’m sure it’s good for us to be in some agreement.” So there’s going to be work to do, for sure there’s going to be work to do. But I think what we need to do is basically keep the focus on the political price of doing the wrong stuff, and to try and keep the pressure on with a big welcoming, thank you hug of the president-elect, following through on the things he promised: moratorium on new agreements, fix the old agreements so that we can have the Buy America expansion and the climate policies and health policies we need. And then hopefully, we’ll spend that time in the moratorium figuring out what a good trade model is, and we can build on the progress that was made in the NAFTA revisions.

Ryan: Rethinking trade is produced by Public Citizen’s Global Trade Watch, I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.