President Biden has said he wants to focus on improving the domestic economy and fostering a more worker-centered trade policy before he considers negotiating new trade agreements. With the elements of that policy starting to take shape, and with recent movement in Congress on a massive infrastructure investment bill and additional measures to aid recovery from the COVID-19 pandemic, the trade community may be wondering if new trade deals could once again be on the horizon. However, a close reading of recent comments and events would seem to quash any such hopes.
U.S. Trade Representative Katherine Tai said in June that a major aspect of the administration’s worker-centered trade policy will be enforcement, particularly of labor rights. For example, the Biden administration has ramped up efforts to exclude imports of goods made with forced labor, particularly from China, where it is now encouraging U.S. businesses to exit supply chains connected to the Xinjiang Uyghur Autonomous Region. The U.S. has also used a new rapid response mechanism under the U.S.-Mexico-Canada Agreement to resolve labor rights violations at two Mexican automotive factories, including an announcement this month that USTR said will “help protect collective bargaining rights in Mexico” and “help American workers by preventing trade from becoming a race to the bottom.”
However, USTR also said that “effective action and diligent, continued engagement are required to ensure that the promises in a trade agreement are kept.” This statement reinforces the administration’s longstanding emphasis on ensuring that existing U.S. trade agreements are benefiting U.S. workers and suggests that despite the early successes the White House wants to see sustained improvement in this area. It remains uncertain, though, exactly what that might entail or how long it might take to achieve.
Secretary of State Antony Blinken made it even clearer in an Aug. 9 speech that new trade deals are not currently on the table. “For too long, we thought we could trade more with the world while investing less here at home. That didn’t work out for our economy, for our workers, or for our communities,” Blinken said. “President Biden has made it clear that before making more trade deals, we must first make a generational investment in our own competitiveness. Our domestic renewal comes first.”
Blinken said efforts in this area will include focusing on “the strength of our workforce, our economic dynamism, the quality of opportunity we offer our people, the resilience of our infrastructure, and the power of our innovation.” While infrastructure investment would get a substantial boost under legislation now moving forward in Congress, administration officials have made clear that efforts on many of the other factors Blinken cited are still in their early stages.
There is also evidence from recent U.S. interactions with trading partners that new agreements are not an option at the moment. For example, Taiwan, which has made no secret of its interest in a bilateral free trade agreement with the U.S., saw USTR essentially shoot that idea down after a recent meeting at which it made no mention of an FTA and instead highlighted a number of trade irritants on which it wants to see progress. Similarly, Uruguay has been working to break free of restrictions under the Mercosur bloc and pursue bilateral trade deals of its own, including with the U.S., but in recent talks Washington said only that it would work to update the two countries’ trade and investment framework agreement. Talks on FTAs with the United Kingdom and Kenya that had been launched under the Trump administration have also been put on hold.
What’s the takeaway for traders? First, they already have access to lower duty rates and other benefits under the FTAs and preferential trade agreements the U.S. has in place with trading partners around the world. ST&R has decades of experience helping companies take advantage of these agreements to reduce their costs and gain advantages in the global marketplace. Second, the Biden administration’s focus will continue to be on enforcing the rules of those existing agreements, so it’s more important than ever for companies to ensure they have sufficient compliance processes in place. ST&R’s attorneys and trade professionals have helped hundreds of businesses avoid the penalties, cargo delays, and other negative impacts that can come from even inadvertent violations.
For more information on how ST&R can help your company, please contact attorneys Mark Segrist at (312) 279-2834 or via email, Mark Tallo at (202) 730-4968 or via email, or Deb Stern at (305) 894-1007 or via email.
Copyright © 2022 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.