U.S. Trade Representative Katherine Tai said recently that the way policymakers think and talk about trade “needs to evolve” to better protect workers and supply chains.

In a video appearance at an event in Germany, Tai said that since World War II “we have thought about trade as something that needs to be liberalized maximally” on the premise that “the more we trade with each other the more peace and prosperity there will be.” This concept is what underlies “the WTO and the multilateral trading system as it has existed for the past many, many years.”

However, Tai said, there have been a number of developments in the past decade “that cause me to wonder whether this vision for globalization leading us to a better more secure world has run its course and if we don’t need a course correction.” These developments include the United Kingdom’s decision to leave the European Union and the ongoing effects, the “America First” approach of the Trump administration, the COVID-19 pandemic, and Russia’s invasion of Ukraine. “We cannot just go back to the world in 2015 and pretend like these things didn’t happen,” she said. “We feel strongly that we have to take history as it’s happened, and we have to adapt.”

Specifically, Tai said, “this ‘free trade equals good; protectionism equals bad’ dichotomy is one that I think we need to revisit.” At a separate event she noted that “there are a ton of people out there who associate trade with offshoring and outsourcing and the loss of jobs and the loss of a significant amount of America’s manufacturing industrial base.” In response, she said, policymakers should consider “how can we adapt the rules of trade to incentivize firm behavior to take into account more than just efficiency.” She acknowledged that such an approach will likely mean higher costs but suggested that is a price worth paying for “a more resilient, a stronger, more sustainable future” that is “better prepared for the next challenge” and benefits people not just as consumers but also as workers.

For more information on how U.S. trade policy is evolving and how it may impact your business, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.

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