President Joe Biden’s nominee to lead US trade policy told senators on Thursday that the principles behind the Trans-Pacific Partnership (TPP) the multilateral Pacific trade deal pursued by the Obama administration then rejected by former president Donald Trump were a “solid equation” for countering China’s growing clout, but stopped short of endorsing a re-entry into the deal.
“The basic formula of TPP, which was to work with our partners, with whom we have very important shared interests economically and strategically, and with the challenge of China in mind, is still a sound formula,” said Katherine Tai, the nominee for United States Trade Representative (USTR), during her confirmation hearing before the Senate Finance Committee.
But she added: “A lot has changed in the world in the past five or six years. And a lot has changed in terms of our own wariness about some of the pitfalls of the trade policies we’ve pursued.”
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The trade accord was revised by the remaining 11 signatories including Japan, Canada and Mexico after Trump pulled the US out, and came into effect as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in 2018.
Tai’s comments on the TPP were the latest sign of the new administration’s mindset as it begins to deal with the contentious issue of US-China trade, and another example of Biden’s sense of urgency that the US must partner closely with its allies as it grapples with Beijing.
They also reflect the thorny domestic politics of trade deals in the US, as officials seek to balance national security concerns with President Biden’s stance that any trade policy should be “worker-centred”.
In her opening statement, Tai made a point of underscoring the US-China trade rivalry: “I know first-hand how critically important it is that we have a strategic and coherent plan for holding China accountable to its promises and effectively competing with its model of state-directed economics,” she said.
“China is simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges,” said Tai, who negotiated with Beijing while working in the office of the US Trade Representative during the Obama administration.
As the US and China spar over human rights and the coronavirus pandemic, they have also been embroiled in a trade war that began during the Trump administration. The Biden administration has not yet said whether it will lift the tariffs that Trump had levied against Beijing.
China has also fallen far short of its commitments agreed to in the phase-one trade deal the two nations signed 13 months ago to purchase more US goods, according to an analysis by Chad Bown at the Peterson Institute for International Economics.
Still, the trade in goods deficit with China fell to $310.8 billion in 2020, down from $419.5 billion in 2018, according to Commerce Department data released earlier this month.
When the deal was signed, it led to some optimism that the two nations were headed for progress on more intractable issues in a “phase two” negotiation.
However, relations deteriorated sharply after the phase one deal was signed; the Trump administration began to blame Beijing for the spread of Covid-19 and the US started instituting sanctions on Chinese government officials for their roles in alleged human rights abuses in Xinjiang and Hong Kong.
Tai told senators that the priority for the phase one deal now must be to enforce the purchasing orders China agreed to: “There are promises that China made that China needs to deliver on.”
Jeffrey Schott, a senior fellow at the Peterson Institute, called Tai’s comments on the phase one deal a sign Biden would not likely move to end it without major concessions from Beijing.
“She’s just looking at reality, and though she didn’t say it, recognising that there would be political costs to trying to unravel the deal, unless there was significant change in Chinese structural policies,” Schott said.
“And that’s something where she admitted… we haven’t made a lot of progress,” he added.
Schott also said that the US would almost certainly not rejoin the TPP without a renegotiation of the pact a position Biden took will campaigning in 2019.
“The hardest part of that would be dealing with labour, and getting Vietnam and Malaysia and others to undertake more rigorous labour obligations and accept stronger labour enforcement procedures,” Schott said.
Beyond TPP and the trade deal, senators also questioned Tai about other points of concern in the US-China relationship.
On allegations of forced labour in China’s Xinjiang region, Tai said: “I think that the use of forced labour is probably the crudest example of the race to the bottom.”
She also discussed US reliance on foreign supply chains, which has become an urgent issue in Washington during the pandemic.
Tai said it was time for the US to reimagine its entire approach to trade: “Trade policy itself needs to be rethought and reformed with resilience and strategy in mind.”
Now the trade counsel for the US House Ways and Means Committee, Tai, who speaks fluent Mandarin, is expected to be confirmed in a bipartisan vote.
Tai was introduced at the hearing with effusive praise by both the top Republican and Democratic representatives on the House panel.
Senators questioning Tai on Thursday signalled a desire to maintain a hard-line stance against China, even as both parties rebuked the unilateral approach previously taken by Trump.
“Our USTR should ensure that the international trading regime strongly reflects American values rather than those of China,” said Senator Mike Crapo of Idaho, the committee’s ranking Republican. “The need for an energetic and effective trade policy is more compelling than ever.”
Senator John Cornyn of Texas, another Republican, called for a return to the Trans-Pacific Partnership.
“I would certainly encourage you and the administration to look at re-entering what I thought was a good idea by the Obama administration and I regret that the Trump administration decided that only bilateral trade agreements made sense and not multilateral agreements,” Cornyn said.
But Senator Elisabeth Warren, a Massachusetts Democrat and a TPP opponent, expressed some of the thinking that may be giving the Biden administration pause about rejoining the deal even if it agrees with the geopolitical principles behind it.
“If the administration won’t ensure that the interests of American workers and American families are prioritised over corporations when we’re writing trade deals, then we’re never going to get beyond a trade policy that leaves American families on the losing side,” she said.
Senator Maria Cantwell of Washington, a Democrat, urged Tai to press for an end of the trade war; she cited data that linked American job losses to the punitive tariffs Trump’s trade representative, Robert Lighthiser, promoted in 2018.
“I’m done with the Trump administration approach to trade… so I’m hoping that you and the Biden administration are going to embrace a new trade regime,” she said.
While Tai’s comments aligned with many of the most strident denunciations of China’s trade and other policies, she made a point of her Chinese ancestry in her opening remarks, noting that her parents are from the mainland and moved to Taiwan before immigrating to the US.
Tai said that her mother developed treatments for opioid addiction at the US National Institutes of Health, and that her father, as a researcher at the Walter Reed Army Institute of Research, worked on treatments for ailments suffered by US veterans of the Vietnam war.
Being American-born, however, Tai mentioned her love for a very American product when answering a question about how she would help facilitate the sale of the country’s beef overseas by advocating for country of origin labelling within the World Trade Organisation.
“I myself obviously was raised on American beef and I’m a very happy consumer of it,” she said.
This is not a CAPTIS article. Originally, it was published here.