Background

President Biden said this week that the U.S. will pursue new trade rules but gave no indication when that might happen or in what context. Biden’s administration has still not set forth its trade policy and any trade-related discussions currently on the radar appear to be limited in scope.

Biden told the United Nations that the U.S. will “pursue new rules of global trade and economic growth that strive to level the playing field so that it’s not artificially tipped in favor of any one country at the expense of others and every nation has a right and the opportunity to compete fairly.” He said the U.S. will also “strive to ensure that basic labor rights, environmental safeguards, and intellectual property are protected and that the benefits of globalization are shared broadly throughout all our societies.”

However, Biden left unsaid how and when the U.S. will undertake these efforts, and officials have indicated that trade agreements, which are often where new trade rules are catalyzed, are not currently on the administration’s agenda. “President Biden has made it clear that before making more trade deals, we must first make a generational investment in our own competitiveness,” Secretary of State Antony Blinken said in a recent speech. “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.” Instead, Blinken said, the administration will focus its efforts 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.” Current indications are that these efforts are still in their early stages.

Officials have also said the administration wants to make sure rules under existing agreements are being enforced and benefiting workers before pursuing additional agreements. There has been some progress on this front. For example, the White House 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. However, the Office of the U.S. Trade Representative has said that “effective action and diligent, continued engagement are required to ensure that the promises in a trade agreement are kept,” suggesting that despite the early successes, more sustained improvements are needed.

There is also evidence from recent U.S. interactions with trading partners that serious negotiations on new trade rules are not imminent.

- Officials have tamped down expectations for deliverables from the World Trade Organization’s ministerial meeting this December, which is expected to address topics ranging from fisheries subsidies to WTO reform.

- A meeting of the U.S.-European Union Trade and Technology Council scheduled for late September, which had been expected to outline areas where the two sides could seek to boost trade cooperation, may be put on hold due to bilateral tensions on unrelated issues.

- Neither the U.S. nor the United Kingdom anticipate a near-term resumption of talks on a bilateral free trade agreement that were begun under the Trump administration. U.S. Trade Representative Katherine Tai told her new UK counterpart, Anne-Marie Trevelyan, this week that the U.S. is continuing its review of “how a potential agreement could support the … Build Back Better agenda” but UK Prime Minister Boris Johnson said “I wouldn’t hold your breath” that an agreement can be negotiated anytime soon.

- Taiwan, which has made no secret of its interest in a bilateral FTA with the U.S., saw USTR essentially shoot that idea down after a recent meeting at which it made no mention of such an agreement and instead highlighted a number of trade irritants on which it wants to see progress.

- 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.

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 current focus is 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 © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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