Podcast: What The Biden Administration Can Do To Fix Our Trade Mess, Part 1

Rethinking Trade - Season 1, Episode 26

The Biden administration inherited a political and trade policy landscape transformed since the end of the Obama presidency by both the Trump trade strategy and the COVID-19 pandemic.

To deliver on its Build Back Better promises, the administration must create new approaches to trade that prioritize good jobs, promote the environmental and energy policies needed to counter climate catastrophe, protect consumer health and safety, and promote small business by breaking up monopolies.

In part one of a two-part series, we discuss the short and middle-term steps the Biden Administration should take to accomplish these goals. Welcome to the Cliff Notes version of the Transition Memo on Trade Policy, recently released by Public Citizen and the United Brotherhood of Carpenters.

Transcribed by Sally King

Ryan: Welcome back to rethinking trade where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in house trade expert, Lori Wallach. So, Lori, we’re recording this in the very first days of the new administration. And as much as the joy as it was watching Donald Trump leave the White House last week. This week, we are focusing on the hard work ahead of us. Importantly, we’re not just talking about fixing the damage brought on by Trump, but by decades of corporate rigged trade policies. So Public Citizen and the Carpenters Union have just released a lengthy transition memo and trade policy which you helped author. The memo lays out a lot of suggestions for fixing US trade policy. So I suggest listeners follow the link in the description to read all of it. But today, we’re going to do a sort of 20 questions style episode covering the memos day one and first 100 day suggestions for the Bible administration. Before we get started, though, Lori, maybe you can just give us a bit of an overview of the vision laid out in this memo,

Lori: I think it could be useful to first start with a little bit of that context. The Biden administration is inheriting a US trade policy and political landscape that has been transformed since the end of the Obama presidency by both Trump and COVID-19. So the COVID-19 crisis, and really the inability of the world’s richest country to make or get essential goods in the face of crisis has awakened a lot more Americans two fundamental problems with the current trade regime concentrating production, a few low wage countries, and having destroyed 60,000 us manufacturing facilities in the last 25 years and the hyperglobalisation. That’s been implemented by agreements like the World Trade Organization, and NAFTA, that have left lots of countries really not all resilient, lis supply chains stretched super thin. So lots of countries just couldn’t get self or gear up to make the stuff they needed. And then you have the Trump effect of Trump becoming president, by connecting to many Americans real anger, about the good manufacturing jobs that are trade policies implemented by Democratic and Republican Presidents alike, have killed and what it’s done to cities and towns across this country, to have the almost 70% of Americans in the workforce without a college degree. See their lives go from a middle class, livelihood to scraping by and uncertainty, and that anger was seized by Trump. But then Trump failed to implement the critical changes that were necessary to really significantly alter the outcomes of US trade policy. Now, on the one hand, there is one really good thing, which is Trump’s Trade Representative Robert Lighthizer. managed to create an enormous amount of leverage pushing in the right direction generally. And the new Trade Representative, a very capable person and Katherine Tai will inherit a bunch of that leverage the outstanding tariffs against China, the revised North American Free Trade Agreement, which has some good stuff, but isn’t getting enforced yet. There are some big problems with the enforcement. So there’s some good stuff to work with at the World Trade Organization, as well, where there’s a bunch of new leverage because of what light hyzer did. So when you then look at what is it exactly that ought to get done? It boils down to something really simple. We really need to change us trade policy to promote not undermined the major domestic policy goals, like dealing with good jobs and decent wages and the underlying economic inequality and racial inequality that has been exacerbated by years of outsourcing good middle-class jobs, and the weakness and frailty in our health and economic security that we have seen with the loss of the ability to make stuff. And making sure in the middle of a climate crisis that is a planetary imperative to deal with. We are harnessing our trade policies to cure the climate crisis, not as has been the past make it worse. And as we face all of the simultaneous challenges, our current trade policies conflict with a lot of the policies that this administration says we’re going to implement things that countries around the world say have to happen. And so the highest of the top-line agenda is, we have to get rid of the policies embedded in our trade agreements by corporations who rigged the rules, that undermine good jobs and affordable medicine and a livable planet. And then we need to put in place the missing roles that prioritize people in planets so that the global economy is harnessed to work for us not to make a handful of really big corporations even richer.

Ryan: And we’re going to get into the specifics about how to do that. Now, how I structured this Lori is it’s going to be like 20 questions, but really 20 statements. And I’m going to read the headline from the transition memo for each of these proposals. And then you’re going to have one minute to explain to our listeners the context of each one. I’m going to set a buzzer on my phones when you hear the buzzer. Time is up, we’re almost up. So you have to wrap up. Are you ready? 

Lori: I’m really nervous but ready.

Ryan: It’s like a game show. Lori: Dun, dun, dun dun, Ryan: A very geeky game show. Okay, this is for the day one immediate stuff. Number one: nominate a US trade representative who is suited to the mission of transforming US trade policy towards a pro-worker, pro-small business, pro-health and pro-environment focus,

Lori: Ding, ding, ding. That was done. Katherine Tai is a terrific nominee for the US trade representative’s office, who will hopefully be quickly confirmed. She is very knowledgeable. She has the right perspective and thinking about how to fix our trade policies. So it works for people on the planet. She’s very hard-working, she’s very strategic. She is the best Democratic nominee for USTR. That could have been possible. So check the box that was done.

Ryan: We are off to a good start number to launch the buy American Trade Pack plan described in the Build Back Better plan.

Lori: So that one is a little bit more of a mixed story. The good news is on the 25th of January, the President issued an executive order that covered most of the territory of what needs to be done. But that executive order did not actually do the things that are necessary to improve the policy. So it will be a matter of watching closely about whether they follow through on a lot of the things that they said they would do in this executive order. If they do it could make a big difference. The big issue here is that the President’s about to spend almost $2 trillion in very much needed COVID stimulus emergency relief. But if they don’t close the loophole that currently has 60 other countries treated like by American thanks to trade agreements, they no longer that money is going to get offshored instead of being invested back into our job. And it won’t stimulate the economy.

Ryan: And folks can see the public citizen statement on the buy American executive order at tradewatch.org. Number three, issue an executive order to remedy abuses of de minimis import provisions by big tech platforms.

Lori: It sounds complicated, but it’s not. It’s a loophole. The big online sales platform slipped into law in 2015. That means that every day you can bring in imported $800 of stuff with no tariffs, no taxes, no inspection. The trick is the Amazon and the other platforms have it set up so that you the customer, not them, the company is considered the importer. What does that mean? They’re bringing in hundreds of millions of packages by air that don’t get inspected, that don’t get taxed. It’s dangerous for the consumer. It’s not fair to the brick and mortar store that actually has to pay the taxes when they bring in the three $700 bicycles. They’re paying tariffs and taxes and having that stuff all inspected. But if we each individually buy those two bicycles. Amazon’s making windfall profit, and it’s not fair and it’s not safe and it’s easy enough to fix. We just have to do it.

Ryan: Okay, number four, announced that the new USTR will consult with Congress stakeholders and allied countries to develop a comprehensive us approach to the future of the World Trade Organization.

Lori: And then there’s an additional thing and will not support appellate body appointments during this process. So that’s the punchline that’s very important. The previous administration stomped along the appointment of the final judges at the WTO. These are the folks who basically order countries to change their laws if their food safety standards are too high, or their financial regulations are too strong, or their environmental laws are too protective of the planet. And so there was a bunch of cases where these on appointed international lawyers in Geneva were just making stuff up and making countries change laws. And it wasn’t even stuff countries that signed up to at the WTO. So right now, we need to figure out before the US starts approving new judges how the rules need to get changed both the procedural rules and the substance. So what we need here is a policy where we basically have a big conversation, what are the goals of the WTO? Heck, it’s already 20 years old anyway, it hasn’t worked out well. So what rules do we need to change what procedures should be changed, and we shouldn’t start up the whole thing, again, to attack our laws and undermine our goals unless and until we know how to fix it.

Ryan: Number five, announced a moratorium of any new trade agreements until a comprehensive review has been undertaken to develop a new trade agreement model.

Lori: So the administration committed candidate Joe Biden committed that they weren’t going to do any more trade agreements and less until they had made major investments in domestic infrastructure worker education and training and manufacturing capacity. And the idea was to get our house in order before we write new agreements, but also to make sure we have agreements and new way of doing them that promote goals like good jobs, good wages, etc. So the big question is, will they stick to that 100%. And what that would mean is not picking up the trade agreements that include a lot of really problematic goodies for big tech and Big Pharma and the financial services, the Wall Street guys, there are agreements being negotiated right now at the United Kingdom, and with Kenya, that are not the right model. And this moratorium needs to apply to those need to go into the deep freeze, if not the recycling bin. And then there’s a really worrisome agreement, global wine at the WTO, that would have all kinds of new rights and privileges for big tech firms that you couldn’t regulate them, they could basically have their way with our privacy, etc. And that needs to also be part of the moratorium.

Ryan: Number six: Direct US Customs and Border Protection to issue a regional withhold release order on all-cotton goods imported from the Zhenjiang region of China.

Lori: So this is easy and quick, that’s actually got done so this administration just needs to keep it in place. What that means is basically an assumption that goods that come from that region, are made with forced labor in these abusive prison internment camps that the Chinese government has filled with ethnic Muslim minorities from the region. And you have to prove as the importer, that the production chain is without forced labor, its assumption that it can’t come in unless you can prove it’s not forced labor. And that creates basically pressure on China to reverse its behavior.

Ryan: Number seven: Announced that existing tariffs on Chinese goods will be maintained while the new administration develops its demands with respect to Chinese subsidies, currency misalignment, and labor and human rights abuses.

Lori: So this is like the WTO situation. You have leverage going in as a new administration. In this case, it’s 30% tariffs on $350 billion worth of stuff. And as you can imagine, all the corporate lobbies are screaming take off, the tariffs take off the tariffs, except those tariffs are leverage. China’s imports to the US have declined in the sectors that have the tariffs on them. And it is a problem. It is a problem that Chinese elite in the government and industry want to have go away, which is to say they might be willing to do some things to make them go away. The previous administration was prioritizing things like better intellectual property protections for companies operating in China, or easier investor terms in China. These would not be things that help US workers. Those are things that actually are counterproductive. They make it easier to offer So the question is, let’s get our policy of what, which certainly is going to focus on things like labor rights and human rights and wages, currency, and not have those tariffs given away without trying to use them to improve the policies.

Ryan: Number eight: issue a de Marche to countries in the UN Commission on International trade laws ISDS Working Group regarding current and future Investor-State Dispute Settlement rules.

Lori: So there’s been so much opposition growing against Investor-State Dispute Settlement ISDS, that the law, the corporate law firms, and some of the big oil companies that like to use that system, which empowers individual companies to go before a tribunal of three private lawyers to demand unlimited compensation paid by US taxpayers, from any government for any perceived violation of an investment agreement, or the investor rules in an agreement like NAFTA, just under NAFTA, over $400 million has been paid out and attacks against environmental policy, health policy, etc. So the guys who like that outrageous rigged system, realize they’re in trouble. And they went to UNCITRAL, that UN body, which is one of the places where they take these cases, to really try and get off the steam. And the idea was to pretend that they were talking about reforming ISDS to try and distract the opposition. And instead, they decided to make that a place to try and lock in a new form of ISDS. And so the US needs to make clear, a written position that the US is no longer for ISDS and isn’t going to join up in that farce.

Ryan: Number nine: Issue a démarche to all nations that now qualify for the African Growth and Opportunity Act or AGOA, or that could qualify, clarifying that the program is not about to be terminated.

Lori: So what this is about is President Trump making threats, including in a meeting with the president of Kenya, that the African Growth and Opportunity Act, which is a policy, it’s not a bilateral agreement, it’s a policy, where the United States passed a law that says African countries from Sub Saharan Africa, if they meet certain criteria can have duty free access into the US, and basically have terms of trade better than what a lot of other countries might get in the World Trade Organization. And the idea was for it to be a development program that wasn’t cash aid, and to help build diversified economies now, Africa, and that policy sunsets in 2025, the current extension, but it’s been extended in 10-year chunks, repeatedly five-year chunks a couple of times. It’s just it’s not controversial. So President Trump was trying to get the president of Kenya to sign up for a free trade agreement where instead of having this access, and you would have to basically have a lot of obligations to US corporations to get the same old access. And it’s really important countries in Africa realize that program is not going away. They don’t need to make a deal that’s bad for their people just to keep what they already have.

Ryan: We’re at number 10. This is the final one for the day one. Number 10: Issue an executive order reaffirming that US trade officials are prohibited from promoting tobacco sales, reducing tobacco tariffs, or seeking to undermine the regulation of tobacco products.

Lori: So what that’s about is what’s called the Doggett Amendment, which was a prohibition from almost 20 years ago, and US trade officials promoting big tobacco. Sadly, during the Obama era, they basically ignored that. And they did a bunch of stuff that was really pro-tobacco in agreements like the Trans-Pacific Partnership. So the idea is to reaffirm that US trade negotiators aren’t going to be pushing deadly tobacco products and other countries in our trade negotiations.

Ryan: You did it!

Lori: So that was that 10th item of what was supposed to be the first-day agenda. Given I couldn’t even summarize each of the 10 items in one minute. Obviously, no matter how good an administration they couldn’t get all that done in the first day. So first day is kind of a term of art for meaning the most urgent short term things that have to happen. And we just got an overview of all the things to set up a good trade policy going forward. And there’s a lot of work to make sure that still happens.

Ryan: And stay tuned for part two where we’re going to do the first 100 day top 10 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. You can find out how you can get involved in the work we’re doing to fight for fair or equitable trade policies.