WITA

Washington International Trade Association

The 2022 Trade Policy

Agenda Of The President
Of The United States
03/06/2022 | Terrence P. Stewart | Current Thoughts on Trade

Biden Terry Stewart Thoughts on Trade Trade Policy

On Mach 1, 2022, USTR released the 2022 Trade Policy Agenda & 2021 Annual
Report of the President of the United States on the Trade Agreements
Program. The fact sheet is copied below.

“WASHINGTON – Ambassador Katherine Tai and the Office of the United

States Trade Representative today delivered President Biden’s 2022 Trade
Policy Agenda and 2021 Annual Report to Congress. This report details USTR’s
work to implement the Biden Administration’s trade priorities and advance a
worker-centered trade policy.
“Over the last year, Ambassador Tai and USTR, working with partners across
the Biden Administration, have pursued a new approach to trade policy that
empowers workers, defends their rights, and stops the global race-to-the-
bottom. By reaching new and historic agreements with our allies,
Ambassador Tai and USTR have revitalized important global partnerships and
built coalitions around shared priorities and values.

“Key elements of the 2022 Trade Policy Agenda and 2021 Annual Report
include:

“Standing up for Workers’ Rights: The Biden Administration’s worker-

centered trade policy reflects our commitment to use our trade agreements,
tools, and relationships to empower workers. We are working with our
trading partners to support workers’ rights and stop the global race to the
bottom. We will seek to establish new, high-standard commitments on labor
rights under our current and new frameworks for trade. Strengthening labor
rights will benefit American workers, as well as workers all over the world.

“Accelerating Decarbonization and Promoting Sustainable

Environmental Practices: Combating the climate crisis and promoting
sustainable environmental practices are top priorities for the Biden
Administration. For many years, trade has been seen as exacerbating these
challenges. The same dynamic that has created a race to the bottom with
respect to labor rights exists with respect to environmental protection.

“Supporting U.S. Agriculture: The Biden Administration understands the

importance of trade to U.S. farmers, ranchers, fishers, and food
manufacturers. From 2000 to 2020, annual U.S. agricultural exports grew
from $58 billion to $155 billion. Through our commitment to creating
sustainable economic growth and establishing a level playing field, USTR is
preserving and building on those gains. The Biden Administration is also
focused on creating new opportunities for American agriculture, including
using our existing Free Trade Agreements (FTAs) and Trade and Investment
Framework Agreements (TIFAs) to support U.S. agriculture exports.

“Bolstering Supply Chain Resiliency: Bolstering supply chain resiliency is a

critical component of the Biden Administration’s efforts to advance our
worker-centered trade policy and create sustainable economic growth.
Supply chains are integral to the global trading system, and the COVID-19
pandemic and the associated disruption to the global economy have
highlighted major vulnerabilities in our existing supply chains, as well as
underscored the importance of promoting supply chain resiliency.

“To begin addressing these challenges, President Biden signed Executive

Order 14017 (America’s Supply Chains) last year, directing a whole-of-
government approach to assess vulnerabilities in, and strengthen the
resilience of, critical U.S. supply chains. Pursuant to the Executive Order, the
Biden Administration conducted a 100-day review for four priority product
areas: semiconductors, large capacity batteries, critical minerals and
materials, and pharmaceuticals and active pharmaceutical ingredients.

Following the recommendations that emerged from the 100-day reports, the
Biden Administration established an interagency Supply Chain Trade Task
Force led by USTR. This task force is directed to identify both unfair foreign
trade practices that have eroded U.S. critical supply chains and opportunities
to use U.S. trade agreements and future trade agreements to strengthen the
collective supply chain resilience of the United States and our trade partners.

“Combatting the COVID-19 Pandemic: Consistent with our trade policy

agenda that recognizes that people are the core of our economy, USTR is
working closely with a number of agencies to ensure that trade rules support,
and do not impede, the global response to the COVID-19 pandemic. The
Biden Administration is taking a whole-of-government approach to address
the pandemic, at home and abroad. These efforts include COVID-19 vaccine
donations through COVAX and other fora, investment in vaccine production
and delivery infrastructure in underserved regions, and working with trading
partners to identify obstacles and solutions – including through supporting a
waiver of intellectual property protections for COVID-19 vaccines at the World
Trade Organization (WTO), as well as measures to facilitate the flow of goods
necessary to fight the pandemic.

“Re-Aligning the U.S.-China Trade Relationship: The U.S.-China economic

and trade relationship is one of profound consequence. As the two largest
economies in the world, the bilateral relationship affects not just the two
participants, but the entire globe.
“The Biden Administration acknowledges that this relationship is complex and
competitive. With respect to trade, we can be both partners and competitors,
but any competition must be fair. China’s approach to trade drives frictions in
many of China’s trade relationships – not just ours. China, as a large, non-
market economy, is uniquely able to engage in unfair, anticompetitive
practices, which harm workers and businesses in the United States and in
other countries, including some of our closest allies and partners. By unduly
concentrating production of certain goods in China, these non-market
practices also undermine supply chain resilience and harm consumers that,
in the long run, are deprived of the innovation and choice that fair
competition would produce.

“Engaging with Key Trading Partners and Multilateral Institutions:

Growing the middle glass, redressing inequality, and incentivizing climate and
environmental action are goals we share with many of our trading partners.
Working with others to craft trade policies that promote these goals reflects
the American leadership that many of our trading partners are seeking. The
Biden Administration is meeting the challenge.

“Using trade policy as a tool to achieve these shared goals, USTR is stepping
up its engagement with partners, allies, multilateral institutions and
organizations. These actors and institutions play a pivotal role in cultivating
any meaningful outcomes to address shared concerns. But to achieve a more
resilient and just global economy, reform is necessary. The policies of the past
contributed to contemporary challenges; we need different policies to
achieve a different outcome.

“Promoting Confidence in Trade Policy Through Enforcement: The Biden

Administration is committed to vigorously enforcing our trade agreements as
a critical element of pushing a global race to the top. Enforcement is a key
component of our worker-centered trade policy agenda. We are using all of
the tools at our disposal to combat unfair economic practices, defend
American jobs, and create broad-based economic prosperity. American
workers and businesses can compete with anyone when the playing field is
level and competition is fair, and trade policy is an indispensable tool in
achieving those goals. We are shaping a global trading system that enforces
labor and environmental standards, protects intellectual property rights, and
ensures that regulations are science-based and predictable.
“Promoting Equitable, Inclusive, and Durable Trade Policy and Expanding
Stakeholder Engagement: Trade policy can play a critical role in advancing
equitable and resilient economic growth for underserved and marginalized
communities, here in the United States and with trading partners who share
concerns about rising inequality. The Biden Administration is committed to
thorough and thoughtful engagement as we develop and implement the
President’s trade policy agenda. Inclusive engagement is a key component to
ensuring that our resulting trade policies are durable and equitable, and
account for previous common policy shortfalls of failing to engage with
communities that will be affected by those decisions. As such, the Biden
Administration will continue to give all stakeholders a seat at the table as we
evaluate and make these decisions.”

Comments

Consistent with the Biden Administration’s actions in 2021, the 2022 trade
policy agenda includes focus on labor rights both in terms of existing
agreements (USMCA) and addressing forced labor, tackling climate change,
addressing agriculture market access through enforcement and country-
specific negotiations, establishing rules for digital trade, making supply
chains more resilient, addressing distortions caused by nonmarket economic
behavior and combatting the COVID-19 pandemic. As stated in the
introduction to the President’s Trade Agenda (pages 1-2 of the report),

“The Biden Administration recognizes that trade can––and should––be a force

for good. Done right, and in coordination with other policy disciplines, it can
grow the middle class, redress inequality, and level the playing field by
promoting fair competition. We remain committed to upholding a fair and
open global trading system – one that follows through on our trading
partners’ longstanding commitment to conduct economic relations with a
view to raising standards of living, ensuring full employment, and promoting
sustainable development.

“To realize these goals, we must take stock of what has worked and what has
not. This requires us to identify and rethink aspects of the existing trading
system that incentivize or enable unfair competition.
“Competition in a global market provides Americans access to a wider variety
of goods and services at competitive prices. But, too often our existing global
trade rules have rewarded advantages that are not based on fair competition
– or American values more broadly. Consumers in the global marketplace are
also wage earners and producers, and members of broader communities
that feel the effects of our trade policies. A trade model that promotes
exploitation, whether of workers or the environment, is not efficient – it is a
form of unfair competition. And it is not sustainable.

“For these reasons, the Administration continues to advance its worker-

centered trade policy. We are standing up for workers’ rights – but it is more
than that. We are promoting a broader agenda of fair competition to ensure
that workers are competing on the basis of skills and creativity, not
exploitative cost advantages. We are laser-focused on working with partners
and allies to chart new trade rules that do more to advance decarbonization
and other critical environmental standards, support U.S. farmers, promote
sustainable and resilient supply chains, and combat the COVID-19 pandemic.
Through this approach, we can harness fair competition and support the
American middle class with increased prosperity while promoting core
American values.

“As President Biden has explained, ‘[We] 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.’

“Exploitation of workers and the environment are not the only forms of unfair
practices that distort global trade at the expense of Americans. We must
recognize that China, as a large, non-market economy, has uniquely distorted
global trade through its economic policies and practices, causing harm to U.S.
production, investment, and even consumption. In many ways, China’s
integration into the global trading system has highlighted weaknesses in the
current system – and the urgent need for reform. Lack of protections for
workers, a weak environmental regime, and anticompetitive subsidies are the
hallmarks of China’s artificial comparative advantage. It is an advantage that
puts others out of business and violates any notion of fair competition.
“That’s why the Biden Administration is realigning our trade policies towards
China to defend the interests of America’s workers and businesses to
strengthen our middle-class, create shared sustainable growth, and spur
resilient climate action. We are working to counter China’s unfair economic
practices, including by raising our concerns directly with China and working
with our partners and allies to address shared challenges.

“We know we cannot effectively advance our worker-centered trade policy

alone. Many of our partners and allies share our goal of a fairer, more
sustainable international economic regime, and we are steadily forging the
partnerships necessary to update and enforce the rules governing the global
economy and trade. One example is the Administration’s success in rallying
the world behind a Global Minimum Tax on corporations to address yet
another race to the bottom that, among other things, has deprived the
United States of resources that should rightfully allow for investment in
communities here at home. Another is the deal we reached with the
European Union (EU) to combat global oversupply in the steel and aluminum
industry and negotiate a first-of-its-kind trade arrangement predicating
market access on the greenhouse gas emissions of imported steel and
aluminum. A third example is the agreements we reached with the EU and
the UK to resolve the longstanding aircraft disputes involving Boeing and
Airbus, which allowed us to move past a perennial irritant and focus on
shared interests, including financing on market terms and the challenges
posed by non-market economies. We are building on this momentum to
advance broader goals of fair competition through all available avenues,
whether bilateral, regional, or multilateral discussions; existing trade
agreements and frameworks; or new initiatives. Where the scope of the
challenge requires new tools, we will pursue them as well.

“A vital element of our effort to build an inclusive trade policy agenda is

understanding the effects of our policies on underrepresented and
underserved workers and communities, and ensuring that they have a say in
how our policies are designed going forward. A more inclusive framework will
lead to more durable trade policy. Approaches to trade that rest on a narrow
base of support are unsustainable, and could ultimately undermine U.S.
leadership at a critical juncture. While our ambition is high, we are rising to
the challenge.
“Precisely because it is focused on workers as the engine of the global
economy, the Biden Administration’s trade policy will be a force for good –
and will lead to a more durable, stable, and resilient trading system.”

What the 2022 agenda doesn’t envision is new free trade agreements
being negotiated by the United States covering all or nearly all goods and
services. Sectoral or limited agreements with trading partners, working
through various multilateral or other organizations are the primary objectives
of the stated U.S. trade policy along with enforcement of existing
agreements. The report lists eight bilateral initiatives and support for one
regional free trade agreement (European Union, India, Japan, Kenya, African
Continental Free Trade Area, United Kingdom, Korea, Taiwan and Singapore).
A major initiative for the U.S. is the so-called Indo-Pacific Economic
Framework (IPEF). USTR’s report identifies the areas where negotiations with
IPEF countries will focus (pages 10-11 of the report).

“We will use this framework to address a range of important areas of

economic cooperation, including: fair and resilient trade (including labor,
digital and other elements); supply chain resilience; infrastructure,
decarbonization, and clean energy; and, tax and anti-corruption. USTR will
lead efforts to craft a trade arrangement with parties that includes provisions
on: high-standard labor commitments; environmental sustainability;
cooperation in the digital economy; sustainable food systems and science-
based agricultural regulation; transparency and good regulatory practices;
competition policy; and, trade facilitation. The specific content of the trade
arrangement will be developed through extensive consultation with trading
partners, a broad base of stakeholders, and Congress.”

While the Biden Administration supports the WTO, the WTO is but one forum
for seeking progress on the President’s trade policy agenda. Reform of the
WTO is the top U.S. priority at the WTO although dispute settlement reform is
not specifically mentioned. The Biden Administration is also interested in
conclusion of the fisheries subsidies negotiations and some of the Joint
Statement Initiatives (e.g., on digital trade). The discussion of the WTO (page
11 of the report) is copied below.

“The Biden Administration is committed to the WTO. Consistent with our

approach to trade policy more broadly, the Biden Administration believes the
WTO can––and should––be a force for good that encourages a race to the top
and confronts global challenges as they arise. There is strong precedent for
this approach: the Marrakesh Declaration and Agreement, on which the WTO
is founded, begins with the recognition that the purpose of trade should be
to raise living standards and ensure full employment, bearing in mind the
objective of sustainable development, and the need to protect and preserve
the environment.

“Unfortunately, the WTO has fallen short with respect to these ambitions, and
its relevance and credibility have accordingly come under fire. In recent years,
the WTO’s inadequacy in responding to the needs of everyday people and the
inability of current rules to effectively constrain unfair trade and economic
practices have only become clearer. The pandemic has put a fine point on the
WTO’s struggle to adapt as an organization and to be relevant in responding
to pressing global challenges.

“That is why the Biden Administration supports a WTO reform agenda that
reflects the priorities of our worker-centered approach – one that protects
our planet, improves labor standards, and contributes to shared prosperity.
Our WTO reform agenda includes restoring efficacy to the negotiating arm
and promoting transparency; improving compliance with and enforcement of
Members’ WTO commitments; and equipping the Organization to effectively
address the unfair practices of non-market economies––such as economic
coercion––and global market distortions.

“The Biden Administration understands that these reform conversations will

take time, and we are working to deliver results on achievable outcomes
through the WTO’s existing structure. Throughout 2021, WTO Members
undertook work to orient Members’ efforts towards a pandemic response
and greater preparedness, and sought to identify priority steps that could be
taken including in the area of trade facilitation and intellectual property
protections. While some progress has been made, there is still no
multilaterally agreed outcome. The Biden Administration supports a waiver of
intellectual property protections for COVID-19 vaccines, but the broader
institution has not been able to reach consensus on an agreement to do so.
We will continue to press for solutions on this issue in 2022.
“Additionally, the postponement of last year’s 12th Ministerial Conference
(MC12) was a disappointment, but safety and security in the midst of a
pandemic appropriately take priority. However, the work can, and must,
continue and MC12 is being rescheduled for late Spring 2022. The Biden
Administration worked diligently throughout 2021 to secure meaningful
outcomes for the planned Ministerial across a range of topics including broad
reform of the WTO. We will continue engaging with partners to make
progress on these issues in 2022.”

As described later in the report, the U.S. puts its focus in dispute settlement,
whether under the WTO or FTAs, on achieving a mutually agreeable solution
where possible. For cases where the U.S. filed a request for consultation,
USTR reports that 38 disputes were so resolved by the end of 2021. An
additional 46 disputes were resolved by completing the dispute settlement
process. Report at 32-33. While many WTO Members are seeking the return
to a two-tiered binding dispute settlement system within the WTO, the U.S.
concerns with the system remain largely unaddressed, including an
understanding of why the system became out of sync with the Dispute
Settlement Understanding over time.

In short, look for much of the U.S. trade policy actions in 2022 to be occurring
bilaterally or plurilaterally with continued WTO engagement but with more
limited expectations for progress within the WTO in 2022.

Terence Stewart, former Managing Partner, Law Offices of Stewart and

Stewart, and author of the blog, Current Thoughts on Trade.

To read the full commentary from Current Thoughts on Trade, please click
here.
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