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Podcast: What The Biden Administration Can Do To Fix Our Trade Mess, Part 2

Rethinking Trade - Season 1, Episode 28

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.

Learn more at rethinktrade.org.

Music: Groove Grove by Kevin MacLeod 

Link: https://incompetech.filmmusic.io/song/3831-groove-grove

License: http://creativecommons.org/licenses/by/4.0/

Transcribed by Sally King

Ryan: Welcome back to Rethinking Trade where we don’t just talk about trade policy, we fight change it. I’m Ryan, and I’m joined once again by our in house trade expert, Lori Wallach. So Lori, two weeks ago, we ran through day one and first 100 day suggestions for the Biden administration on how to fix our rotten trade policies. Today, we’re going to jump into the longer-term changes laid out in the recent transition memo and trade policy that Public Citizen and the Carpenters Union put together. For the listeners, you should definitely check out part one as well. But here’s part two. Lori, are you ready to answer some questions?

Lori: I am.

Ryan: So like last time, I’m going to read the headline from this document for each of these policy proposals. You’re going to have about one minute to explain it to our listeners, when you hear the buzzer means your time is just about up. You ready to go?

Lori: I am.

Ryan: All right, part two, number one: Conduct an inclusive, comprehensive, transparent process to review existing trade agreements for consistency with the Build Back Better plan.

Lori: So that’s kind of self-explanatory. The point is that many terms in our existing trade agreements have nothing to do with trade per se, but rather conflict with the climate and the health and economic justice focus of the Build Back Better plan. And its things as diverse as the ban on buy local or buy American procurement, which is used to reinvest our tax dollars into developing new EV electric vehicle technology or renewable energy sources domestically, it is rules to get subsidies that could help that could stop the government from investing in making more medicine domestically, it is rules about standards that could basically require us to import goods that are climate dangerous and not be able to distinguish. And so all of that stuff needs to be reviewed needs to be fixed. So our trade agreements support, not undermine the whole wide set of non-trade goals that are in the bill back better plan.

Ryan: Number two: Launch a review of USMCA implementation to develop an action plan around labor and environmental rules.

Lori: So the revised NAFTA, which Trump called the US Mexico Canada agreement, had some improvements on paper, but a lot of it still is not implemented. And there are a lot of powerful interests and elite players in the governments of the three countries that may or may not be interested in implementing all of it. So it’s really important that the people and planet parts of that agreement, the labor standards, the environmental standards, water quality, etc, that a plan to make sure that stuff is actually translating from paper to improvements on the ground is created and then enforced. And that’s everything from cracking down on those border maquiladora plants where workers are being forced to go back to work without COVID protections in Mexico, where unions are still being busted to making sure that the investment of water improvement funds and environmental cleanup money actually goes to where it’s supposed to be.

Ryan: All right off to a good start again. Number three: Establish a position at the National Security Council focused on U.S. supply chain resilience.

Lori: So the idea here is we need an all government focus on rebuilding domestic supply chains, and also diversifying these sources of imports for critical goods. The COVID-19 crisis made clear to every American. Here we are in the richest country in the world, and we can’t get basic stuff. I mean, we can’t get the medical stuff like masks and enough medicine, which in itself is a crisis. But we can’t get basic stuff so that if one country in a long, hyperglobalized thin supply chain, were to make, you know one product of food or one electronic product, you have to have the pieces only made each one in one country of 50 countries and one country goes down because there’s sickness could be a natural disaster next time the whole thing falls apart. can’t have that. This was a real lesson. And so we need coordinated plans to rebuild our resilience and to build stronger supply chains.

Ryan: Number four: Implement the Build Back better by American and other domestic preference program reforms.

Lori: So this is really actually extremely urgent. This is both a longer-term project where our new US Trade Representative will need to be negotiating with other countries to take back the policy space for how we use our taxpayer dollars in procurement that was given away and agreements like the WTO and NAFTA and CAFTA. Right now we have to treat the goods, the services, the companies from 60 other countries as if it was Buy American, so Buy American now means the US and 60 other countries. So that needs to get fixed, because that’s in the terms of agreements that need to be renegotiated and President Biden has said he wants to renegotiate those so we, but also our trade partners, can use their tax dollars as a tool to develop their own economies and innovate and invest in their own people. But in the short term, the president needs to immediately wave with respect to the emergency trillions of dollars for COVID relief, and recovery, these limits that make us basically break Buy American. Otherwise, instead of stimulating our economy, instead of starting to invest in being more resilient at home, that money is just gonna get offshored. And there’s no conditions on labor standards or environmental human rights conditions. So it could mean our tax dollars go to invest in, you know, goods made in horrible human rights conditions in China, or in plants have busted unions in Mexico. So this is both the short term and long term problem.

Ryan: Number five: Launch a review process to formulate a new US position on digital trade.

Lori: So digital trade is the corporate brand that the Big Tech firms have given to trying to use trade agreements to impose worldwide limits on the regulation of the Big Tech platforms. And some very bad rules like that are in the revised NAFTA, but and in an agreement with Japan that the US pushed, but also they’re being pushed at the World Trade Organization for the whole world. And the US has been one of the leaders in pushing for these rules that basically mean governments can’t regulate for our consumer data privacy, something that’s a huge problem in the US and in many countries, but the US is way behind everyone else. It means that we can’t get rid of the liability waiver. That right now means things you buy online, Amazon and other companies pretend that they have no product safety liability. So if the product kills you, you could sue a store, but you can’t sue them, they pretend they’re not the buyer. They pretend the seller, I mean, they pretend they’re just a communications platform, and also a lot of problems around discrimination based on the algorithms that the companies use. So that, you know, white people are offered information on better jobs and black people get less information on good housing, all of those kind of rules, we have to have a new approach to because we need to regulate big tech, not let them use trade agreements, to basically abuse people worldwide.

Ryan: Number six: Implement new US Trade Representative transparency standards.

Lori: So it’s not so much the USTR per se, but rather the whole agency. Historically, there has been a lot of behind closed doors, negotiation and secrets information. And these are these negotiations are making policy on things that affect all facets of our everyday lives. But unlike say the Freedom of Information Act, we can get government documents or the government the Sunshine Act, where meetings have to be open. There’s a lot of secretive stuff that happens in trade. That is just inappropriate, given what today’s trade agreements have meddling in from, you know, access to medicines, to food safety, to where our tax dollars go. So we need to actually have a much more open process so that people not only can get access to the information and know what the government is doing, ostensibly on our behalf but also so that we can have more of a means of giving input of what we want. Right now. There are 500 official advisors who are cleared to see the secret documents have special access, and almost all of them are corporate that can’t stand.

Ryan: Number Seven: Work with Congress to update trade preference programs, including the Generalized System of Preferences or GSP, and an early reauthorization of the African Growth and Opportunity Act (AGOA).

Lori: So in addition to trade agreements, the US has what are called trade preference programs. Nice statutory programs that set terms for special, better access into the US market for developing countries that are better tariff, lower tariff rates, for instance, that are included in our global WTO commitments. And the idea that these programs is they should be development programs. And they need to have conditions are pro-development for what a country has to do to get these special market access rights. Unfortunately, over time, the agreements haven’t kept up to the transformation and trade policy. So GSP has some labor standards, but they’re pretty weak. And the African Growth and Opportunity Act has a variety of conditions you wouldn’t want to impose on countries we’re trying to help them develop. And in both instances, the programs need to be updated to basically put people and planet standards in place. But also, with the African Growth and Opportunity Act. It needs to be reauthorized early because President Trump was running around to African countries threatening it would go away, and they better sign up for a whole free trade agreement or else which really isn’t in their interest or ours.

Ryan: Number eight: Work with the Treasury Department to require all foreign private-sector sovereign wealth fund controlled or state-owned enterprises seeking to list on us capital markets to meet all transparency standards to which US domestic firms are subject.

Lori: Okay, so that was a mouthful. But what that boils down to…

Ryan: That almost took me a minute.

Lori: What that boils down to is this scam, which is the Treasury Department has been waiving the requirements, particularly for a state-owned enterprise means just literally that government-owned firm. There are a lot of Chinese state-owned enterprises, but also some of you there, it’s not inherently a problematic thing. You know, the US government port authorities are like a state-owned enterprise. But there are a lot of commercial ones that aren’t running services like the Tennessee Valley Authority is a state-owned enterprise. But yeah, it’s a government service. But the ones that are competing and trade from other countries and sovereign wealth funders, that’s government money, that is investing as if it were a private investor, they’re allowed to go to the stock markets, which is where the capital market is so to the New York Stock Exchange, without meeting all the normal requirements that US firms be subject to. And what this is caused is these real conflicts where Saudi Arabian state-owned enterprises and sovereign wealth funds and others from the oil-producing nations, and Chinese state-owned enterprises are buying up US firms that might have a security concern with such ownership or countries with really horrific human rights reputations are buying up sensitive firms and we don’t know and or they’re getting money on the capital markets, without us knowing. So something’s being listed. And we’re having us stock buyers put money into it and make it powerful. We don’t know who it really is.

Ryan: Number nine: Direct the Department of Commerce to declare that China is not a market economy.

Lori: So this is another kind of wonky thing, but it’s actually has a lot of repercussions. How you ask domestic trade policy works with respect to different trade, cheating remedies, like dumping stuff on the US market, below the price of production, that and also how a country is treated at the World Trade Organization has to do with whether or not a country is considered a market economy. If you’re a market economy, you get kind of treatment the US, Canada, Brazil, India, Japan, Korea, South Africa get but if you’re not a market economy, ie you have a lot of government intervention, a lot of government funding. So you know, a country like China, then you are treated with, I would say, more wariness about what’s a subsidy and what isn’t? What’s fair trade and what isn’t? And so it’s going to make a big deal for US jobs. And for US companies, especially those that try and create some new US investment in things like electric vehicles and battery storage, new materials, the cutting edge industries, that it’s clear, China’s not a market economy and they need to be treated that way. And China has been making a lot of threats about if countries don’t declare the market economy, they’re going to do this or they’re going to do that. And so far all the world’s countries have stuck together and said, if you’re a market economy you are but you’re not so you’re not and that should stay the current position.

Ryan: All right, we are at the final one number 10: Don’t continue with business as usual with respect to publishing a national trade estimates report that includes lists of other countries environmental food, safety, health. and other public interest protections identified as, quote, illegal trade barriers.

Lori: So every March 1, the US government comes out with a report called the National Trade Estimates. It sounds like innocuous, it’s not. It’s a country-by-country report where, in the course of the year leading up to it, US industry is invited to offer things that they think are unfair trade practices of other countries. And they get listed in the official government report of things these other countries better get rid of. And so the problem is, it ends up being a list of, you know, there are some real trade problems in there, like subsidies or, you know, things that act like a quota a limit on imports, that aren’t health or safety-related, and they’re honest to god protection. But the vast majority of what is in this report is just targeting the environmental, health, worker safety, food safety, product safety, and other public interest protections that other countries have. And that won’t be if they’re if the US product has GMOs, and the country requires labeling, if it comes in, if it’s not labeled, it can’t come in. If another country, for instance, bans the use of chlorine washes, you know, basically crappy chicken, chicken that least liras, feces on it, dipped in chlorine, which is how our system works versus making sure it’s clean on the front end. If it can’t come in, it can’t come in, if other countries will not, for instance, store computer data through the US, because we don’t have any privacy protections. And we’re not considered safe for that. All right. And so be, as long as it’s not discriminatory, it shouldn’t be on a trade shit-list. And that is what that national trade estimates list has become. And instead, it should focus on whether real trade problems, where there’s actually a benefit for us workers to fixing real trade cheating and not become a hit list of other countries domestic policies that our companies don’t like because some products they make can’t be sold there.

Ryan: Good work, Laurie, I think you got 50% of them and under a minute. And again, folks should check the link in the summary of this episode, or just go to tradewatch.org. And you can see the transition memo on trade policy.

Lori: And for all the fun that Ryan and I are having about my trying to say what this means each of these bullets in one minute. It’s worth reading the memo because it does spell out a roadmap to how we could have a US trade policy taking the opportunity of an incoming administration that seems keen to change some things to actually try and have policies that put people on the planet as a priority.

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.