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New Senate Finance Chairman Sets Markers on Trade Policy

Friday, April 11, 2014
Sandler, Travis & Rosenberg Trade Report

The Senate Finance Committee’s new chairman laid out in an April 9 speech before the American Apparel & Footwear Association his vision for U.S. trade policy in the 21st century. Sen. Ron Wyden, D-Ore., who took the reins of the powerful trade oversight committee earlier this spring after the departure of Max Baucus, said his view is that “every single trade discussion must now focus on how trade policy can be a springboard to high-skill, high-wage American jobs.” Wyden’s focus is an implicit response to accusations from some corners that U.S. trade policy, and the free trade agreements the U.S. has negotiated over the past decade or so in particular, have resulted in the loss of manufacturing and other jobs to foreign competitors, primarily benefited U.S. corporations and worsened the U.S. trade deficit.

Wyden said his philosophy on trade is for “Americans [to] grow and make things here, innovate and add value to them here, and ship them somewhere, whether in containers, on airplanes, or in electronic bits and bytes.” Toward that end, he said, trade policy should contribute to the creation of “jobs in innovative fields that didn’t exist before the digital era, … jobs in high-tech manufacturing that can’t be easily outsourced, [and] … jobs that give Americans a ladder into the middle class.”

Trade agreements can help achieve these goals, Wyden added, if they include certain key elements. First trade agreements need to be enforceable and the U.S. needs to be vigorous in following through on that enforcement. Second, they “must promote digital trade” by preventing unnecessary restrictions on data flows or requirements to localize data and servers and including assurances that Internet companies have no more legal liability in foreign markets than they do in the U.S. Third, agreements “must combat the new breed of predatory practices that distort trade and investment and cost American jobs,” including state-owned enterprises, indigenous innovation policies and currency manipulation. Fourth, they must include commitments on labor and the environment that are “core parts” of the agreement, “rather than something like a side deal that’s just coasting along for the ride.” Finally, they must be ambitious in opening foreign markets and helping increase U.S. exports.

Wyden made specific commitments to work to ensure that future trade agreements are “ambitious on footwear and apparel;” do not contain measures similar to the Stop Online Piracy Act, which opponents feared could open the way for online censorship; improve labor rights in countries like Vietnam and Malaysia; and end subsidized and illegal fishing as well as illegal trade in timber, wood products and wildlife.

To secure congressional approval of trade agreements, Wyden urged an approach he called “smart track,” which he sought to differentiate from the “fast track” trade promotion authority bill introduced earlier this year by Baucus and others. However, he gave little indication as to what this approach would entail, saying only that he wants to hold trade negotiators “more accountable to the Congress … [and] the American people” to help ensure that trade agreements “respond to the concerns of our people and their priorities, and not just to special interest groups.” He said he will work with colleagues and stakeholders “in the days and weeks ahead” to develop a legislative proposal “that accomplishes these goals and attracts more bipartisan support.”

Wyden singled out U.S. Customs and Border Protection for criticism with respect to its trade enforcement efforts. “Customs often appears to focus on security at the expense of its trade mission,” he asserted, citing in particular continuing problems with imported goods that infringe U.S. intellectual property rights and evade trade remedy measures. “A 21st century trade policy can’t work if the cops at the border aren’t doing an adequate job on the beat.”

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