Restarting the Trade Agenda

There is growing Congressional sentiment that the United States should be pursuing ambitious trade agreements — the kind that involve tariffs, market access, and Congressional authorization. This message is coming from both Republican and Democratic members of the Senate Finance Committee and House Ways and Means Committee. This is a challenge to the White House, which so far has eschewed traditional trade agreements in lieu of initiatives like the Indo-Pacific Economic Framework (IPEF) and the U.S.-EU Trade and Technology Council (TTC). These programs seek commitments from our trading partners in dozens of areas from supply chain security to clean energy to digital trade — but they are not traditional trade agreements that involve “market access” or tariff commitments, nor do they — in the view of the Administration — require Congressional approval. The Biden Administration has also allowed trade promotion authority to lapse and it suspended the U.S.-UK trade negotiations that began under President Trump.

There are prominent voices in Congress saying that the United States is missing an opportunity in forgoing new trade agreements, particularly with our Pacific partners. Japan and Singapore, two of the United States’ top Asian trading partners, have urged the United States to show bold leadership on trade in the Pacific. Senate Finance Committee ranking member Senator Mike Crapo (R-ID) recently said that the United States has been on the sidelines while China aggressively pursues trade agreements. He stated that there was bipartisan interest in pursuing new trade agreements as a means to compete with China and to open foreign markets to U.S. goods. (He added though that Congress would not authorize trade promotion authority unless the Biden administration asked for it.) New legislation provides further evidence of Congress’ interest in restarting the trade agenda: Senator Bill Cassidy (R-LA) introduced a bill that would invite countries within the Americas to join the U.S.-Mexico-Canada (USMCA) regional trade agreement if they meet certain requirements. Senator John Thune (R-ND) and Senator Chris Coons (D-DE) introduced legislation March 2 that would grant trade promotion authority for the Administration to conclude a U.S.-UK trade agreement. Senator Lisa Murkoswki (R-AK) introduced legislation expressing the sense of the Senate that the United States should negotiate a trade agreement with Iceland — a non-EU NATO member. In the previous Congress, Senators Rob Portman (R-OH) and Chris Coons (D-DE) led an effort to pass a trade bill that included renewal of Trade Adjustment Assistance (funding for trade-displaced workers), reauthorization of the Generalized System of Preferences (trade benefits for least developed countries) and a new Miscellaneous Tariff Bill, which allows companies to petition for specific tariff reductions on imports. There is reportedly a chance this legislation could be reintroduced in the current congress.

Adding tariff and market access provisions to the Administration’s trade approach would make agreements more durable, impactful, and enforceable, goes the argument. It could also provide incentive for our trading partners to engage in negotiations in a more meaningful way. Critics say that without these provisions, the U.S.-EU TTC and IPEF will not amount to much. At the same time, it is important to consider that pursuing comprehensive trade agreements is frequently an arduous process that does not guarantee success. The U.S.-EU Transatlantic Trade and Investment Partnership negotiations ran aground under the weight of intractable regulatory obstacles, differences over agricultural market access, and opposition from European civil society. And in 2016, both presidential candidates came out in opposition to the Trans-Pacific Trade Partnership after labor and environmental groups raised concerns about the Obama-era negotiated text. On the other hand, USMCA passed the Senate with overwhelming bipartisan support during the Trump Administration.

U.S. Trade Representative Katherine Tai did not mention free trade agreements during her interview this week with Foreign Policy magazine. Commerce Undersecretary for International Trade Marisa Lago, speaking on behalf of the Biden Administration at a Washington DC trade conference, said the Administration was conducting robust commercial engagement in the Pacific but that the “current environment was not conducive to signing traditional trade agreements.” Certainly the Administration has a role to play in shaping this environment. Congress wants to play a greater role in trade policy and is asking for much closer consultations on the IPEF and TTC talks. While there is nothing new about Congress demanding a bigger say in trade policy, the White House would be wise to explore how it can team up with Congress to pass modern trade legislation that is fit for the 21st century and designed specifically for the dual purpose of a) helping U.S. businesses compete against Chinese competitors and b) shoring up our alliances.