The Biden administration’s efforts to revamp U.S. trade policy could run into roadblocks in Congress, where a growing number of lawmakers on both sides of the aisle are raising concerns about both the substance and the style of the White House’s approach. Those concerns were front and center during recent hearings held by the Senate Finance and House Ways and Means committees and featuring U.S. Trade Representative Katherine Tai.
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Trade Agreements
Tai said the administration is “writing a new story on trade … one that puts working families first and addresses today’s pressing issues.” She highlighted multilateral initiatives like the Indo-Pacific Economic Framework and the Americas Partnership for Economic Prosperity, as well as bilateral efforts like the U.S.-European Union Trade and Technology Council and trade talks with Taiwan and Kenya.
However, Tai is under increasing pressure to pursue more traditional free trade agreements, which supporters say are more durable and enforceable than the initiatives the administration is pursuing because they are subject to congressional approval and codified into law.
In a March 23 letter, nearly two dozen House Ways and Means Republicans said that “not pursuing new tariff-reducing enforceable trade agreements breaks a four decade long bipartisan approach to trade policy and means we are missing out on opportunities” to advance U.S. economic interests.” They explained that the U.S. “has come to a virtual standstill in competition for economic influence because of a focus on dialogues, frameworks, and limited agreements that lack meaningful enforcement mechanisms and market access commitments.” Instead, they said, the White House “should use USMCA as a model and foundation in pursuing agreements with other allies and trading partners around the world that serve our economic and strategic interests.”
In recent hearings before the Senate Finance and House Ways and Means committees, Tai recognized that FTAs and the tariff cuts they feature have benefited some U.S. industries and said “we remain open minded” to considering them “when it is right for the partner and the times.” However, any such determination appears unlikely because Tai said she believes FTAs have contributed to the problems the Biden administration is now trying to fix through its worker-centered approach.
"We live in a very different world” now compared to when the U.S.’ FTAs were negotiated and “we can't keep doing things the same way,” she said. “A lot of the challenges that we are facing today, whether it is supply chain challenges, whether it is the challenges that we are facing from non0market economy practices, like those from [China] to Russia's invasion of Ukraine … a lot of these have roots in a traditional trade approach that has brought us to where we are today,” a Law360 article quoted her as saying. “Pursuing failed trade policies does not guarantee that we become stronger.”
Role of Congress
Many lawmakers highlighted growing concerns about what Senate Finance Chair Ron Wyden called the White House’s “go it alone” trade policy. Tai has said repeatedly that IPEF, APEP, and other ongoing trade initiatives will not need congressional approval, but that position was soundly rejected by lawmakers on both sides of the aisle in the recent hearings.
The Constitution “requires Congress to be at the center of U.S. trade policy,” said Ways and Means Chair Jason Smith, and Sen. Wyden added that “it’s unacceptable to suggest otherwise.” The March 23 letter from House Republicans agreed, telling Tai that given “Congress’s exclusive constitutional authority over foreign commerce, you lack the ability to bind the United States in this area without congressional approval.”
Some Democrats were critical of USTR on this issue as well. Senate Finance Ranking Member Mike Crapo chastised Tai for refusing to share advisory committee opinions on IPEF or the views of partner countries in that initiative with Congress. Rep. Lloyd Doggett said the administration’s trade initiatives will be “meaningless” if they are not enforceable and that the only way to make them so “is to engage the Congress more directly in setting up that enforcement mechanism and honoring our constitutional responsibility.”
According to a Politico article, Tai responded that USTR will “make further enhancements” to its efforts to engage Congress and improve public transparency, including making it easier for congressional staff to review negotiating texts and making text summaries available to the public. It remains unclear, however, what measures Congress could take if USTR continues to fall short of its benchmarks on engagement and transparency.
China
Tai offered few details on how the U.S. is addressing longstanding trade concerns with China. She noted that USTR launched a review of the Section 301 tariffs on imports from China nearly a year ago but offered no information on when that review might be completed. She also said USTR is conducting a “deliberate and strategic” review of U.S. trade policy toward China writ large but did not indicate how it might “turn the page on the old playbook,” a step she first urged a year ago.
Tai said the U.S. continues to “keep the door open to conversations” with China, including on its commitments under the so-called Phase One Agreement, but no such talks appear to have been held recently or to be on the schedule in the near future. Smith criticized the administration’s failure to yet provide “a comprehensive accounting of China’s compliance” with this agreement.
Instead, Tai said, the U.S. is focusing on increasing its own ability to compete with China through legislation that will repair trade infrastructure and bolster domestic production of critical technologies and green goods. However, Sen. Crapo said U.S. trade policy “cannot rest on massive spending on subsidies,” an approach that “borrows more from China’s traditions than ours.”
Enforcement
Tai asserted that the Biden administration has been “laser-focused” on trade enforcement, citing as examples its use of dispute settlement mechanisms under the U.S.-Mexico-Canada Agreement, its enforcement of the eligibility requirements in U.S. trade preference programs, and its efforts to combat forced labor in supply chains with the EU and Japan (though she gave no update on when USTR might complete its development of a forced labor strategy).
However, Sen. Wyden said the administration “needs to ramp up enforcement of the trade laws that are already on the books – across the board.” This includes enforcing “every provision of every chapter of USMCA,” he said, and bringing dispute cases at the World Trade Organization, which the Biden administration has yet to do after two years in office.
Tai raised the possibility that USTR may need additional enforcement tools, saying existing ones “may not adequately address the challenges posed by today’s economy,” and said she will work with Congress “to identify areas where new tools may be needed.”
Market Access
Tai argued that despite its decision not to pursue tariff liberalization or traditional trade agreements the Biden administration has sought to open foreign markets in other ways, noting agreements that will aid U.S. exports of beef to Japan, agricultural products to the EU, and pecans to India.
However, Sen. Crapo called the administration’s ambition in this area “strikingly limited,” highlighting as examples the lack of tariff reductions in USTR’s most recent trade agenda, the omission of rules on technical barriers to trade and intellectual property rights in IPEF, and the failure to date to press the EU on “measures that unreasonably target the U.S. digital economy.”
Sen. Wyden agreed and said the administration “should be taking every opportunity” to expand market access. While he praised Tai and her team for “thinking outside the box” by pursuing goals like supply chain resilience and access to critical minerals, he said the administration “must deliver new markets – like the Middle East and Africa – and trade in new products – like renewable technology and digital services,” and he warned that the U.S. “cannot conclude agreements … that leave issues facing our exporters unaddressed.”
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