Katherine Tai, President Joe Biden’s nominee to serve as the next top U.S. trade negotiator, acknowledged during her confirmation hearing last Thursday that trade policy over the past few decades benefited corporate interests at the expense of workers and the environment. But Tai declined to commit to making the U.S. trade representative’s (USTR) office more accountable to lawmakers and the public.
Tai did not respond directly to questions about transparency asked by Democratic members of the Senate Finance Committee. Sen. Bob Menendez (D-New Jersey) pressed Tai to support legislation that he cosponsored, which would create an inspector general serving as an official watchdog for the USTR. Sen. Elizabeth Warren (D-Massachusetts) asked Tai about the possibility of the USTR releasing draft trade negotiations “at least two months before Congress is asked to fast-track it” so that lawmakers have the opportunity to propose amendments.
(Under current rules, which were signed into law in 2015 by then-President Barack Obama, Congress doesn’t receive the text of trade deals until after relinquishing its treaty-negotiating authority to the White House — the so-called “fast-track” process that Senator Warren referenced in her question. The law that established the current regime is set to expire on July 1.)
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In response to both lawmakers, Tai hailed the principles behind their inquiries, but did not directly comment on either proposal. Warren was disappointed.
“I very much appreciate that you want to engage with the American people on this, but what I’m really looking for here is a hard commitment,” Warren said, in the most contentious moment of the confirmation. “To me, this is another place where the administration needs to take a hard line. Trade negotiations must be open and transparent to the public.”
Nevertheless, left-leaning Democrats were pleased by her recognition of long-standing progressive critiques of trade liberalization — the practice of eliminating laws that hinder international commerce, even if those laws were crafted to bolster protections for workers, consumers and ecosystems.
For example: While Tai praised the motives behind the Trans-Pacific Partnership (TPP), just like President Biden has done, she distanced herself from efforts to rejoin the agreement. The TPP was widely criticized by labor unions and environmental groups for undermining economic regulations, and was opposed by both major presidential candidates during the 2016 election. In 2017, then-President Donald Trump pulled the U.S. out of the TPP, during his first days in office.
“A lot has changed in the world in the past five or six years, and a lot has changed in our own awareness about some of the pitfalls of trade policies that we’ve pursued as we’ve pursued them over the most recent years,” Tai remarked in response to a question urging the Biden administration to rejoin the TPP, from Sen. Steve Daines (R-Montana).
Tai also noted, more broadly, that U.S. trade policy in recent decades has primarily served to make winners out of corporate executives and shareholders, and losers out of everyone else.
“I think that for a very long time, our trade policies were based on an assumption that the more we traded with each other, and the more liberalized our trade [became], the more peace and prosperity there would be,” she said. “I think what we see, in the parlance of some of the economists who have been thinking about this: Over time the trends we see are a race to the bottom.”
“With increased economic activity and trade activity, we aren’t necessarily seeing that bring up standards with respect to workers and environmental protection,” Tai added. “I think this prompts us to really have this inform our rethink of our strategic trade policies and figure out how trade policy can be conducted in a way that truly does lift all boats.”
Tai also touted recent efforts to reverse this trend, in response to a question from Sen. Sheldon Whitehouse (D-Rhode Island) about investor-state dispute settlement (ISDS) panels. ISDS are courts established by free trade agreements in which only investors can file litigation against governments for erecting barriers to trade. Whitehouse lamented the existence of such panels, which are part of most trade deals that the U.S. has signed, by noting how Philip Morris bullied Togo out of passing a law that would have added images to cigarette warning labels. The tobacco giant achieved this in 2013, in part, by invoking the threat of ISDS action in trade agreements signed by the small West African nation.
“On this, I would just acknowledge and recognize that President Biden himself has articulated his opposition to ISDS on the basis of the chilling effects that it has on other countries’ policy-making,” Tai said. She mentioned that President Trump’s USTR, Robert Lighthizer, was also opposed to ISDS. The rewrite of the North American Free Trade Agreement spearheaded by Trump and Lighthizer, the U.S. Mexico Canada Trade Agreement, significantly weakened these investor dispute settlement mechanisms.
Additionally, however, Tai said she would defend corporate interests by looking into establishing new mechanisms to defend intellectual property — patent protections for various brands and products, including vital medicines.
Intellectual property rights have gained new importance during the global COVID-19 pandemic. The World Trade Organization (WTO) — a global regulatory body that contains 164 members and observers, including the United States — has blocked a proposal put forth by India and South Africa to grant a waiver to patent protections that are preventing poorer countries from accessing COVID-19 vaccines.
“The Trump administration led a very small group of WTO members in blocking this important public health initiative,” explained Public Citizen trade expert Lori Wallach, in a virtual press conference held on Friday. WTO rule changes are typically only approved by unanimous consent. Joining the U.S. in blocking patent waivers on COVID-19 vaccines were representatives of other wealthy countries, including Great Britain, the European Union, Norway, Switzerland, Japan, Canada and Australia.
“Unfortunately, in the first two meetings of WTO committees since the Biden administration arrived, the U.S. position has not changed,” Wallach noted.
Ultimately, Tai was hailed by lawmakers on both sides of the aisle and looks set to sail through the confirmation process.