Wednesday, June 29, 2022

USTR Talks Tariffs and a New Indo-Pacific Partnership

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“Our approach to tools for mitigating and addressing that inflation need to respect that it is a more complicated issue than just tariffs at the border.”

U.S. Trade Representative Katherine Tai spoke this Monday to an audience of reporters and members of the Washington Trade Association (WTA) about the Biden administration’s response to ongoing trade disputes. 

There was a lot for her to cover as the Biden administration has a lot of trade issues on its plate: Later this week Ambassador Tai will speak at the Summit of the Americas, then travel to Geneva for a ministerial conference with the World Trade Organization. At the center of attention on Monday, though, was the economic agreement between the United States and twelve Pacific partners, unveiled by President Biden during his trip to South Korea and Japan last month.

The Indo-Pacific Economic Framework, or IPEF, is built around four “pillars,” ranging from environmental and labor standards to preserving the integrity of innovators in their respective countries from attacks such as intellectual property theft. Any commitment to one of the above, said Ambassador Tai, is something that the administration can work with.

“We are reflecting a Biden administration approach, which is to create a more holistic approach to economic engagement,” she said. “I think frankly, basically, when the United States shows up and shows leadership … there is interest, and it will be reciprocated.”

“What is the point of a trade dispute? You could think of it as a way to fight each other … but it’s a way to ensure that something that is negotiated has meaning.”

U.S. Trade Representative Katherine Tai

Ambassador Tai also highlighted the importance of anchoring concrete commitments to trade enforcement, saying that her office and that of Commerce Secretary Gina Raimondo “need to be delivering along the way instead of holding everything together until it comes together at the end.”

“What is the point of a trade dispute? You could think of it as a way to fight each other … but it’s a way to ensure that something that is negotiated has meaning,” Tai elaborated. “It’s an accountability mechanism. Looking at holding them accountable, not just the other country, but that companies are also abiding by expectations of the agreement itself.”

This is one of the administration’s goals with the IPEF – to create a more durable, resilient supply chain with partners who uphold like-minded values and play by the rules. We know firsthand what happens when we outsource our industries to countries that don’t do either. We’ve argued that tariffs are one way to ensure that American manufacturers can compete – and hopefully correct – trends that international bodies have had a difficult time in combating.

She also took a moment to address the debate going on within the administration about potentially scrapping tariffs on China that date back to 2018. Advocates for this idea have suggested it would cut into the high inflation rate, even if the impact on the rate of doing so would be tiny.

“The economy is large and there are a lot of pressure points and levers in that economy,” Tai said. “If we’re going to take on an issue like inflation, and given the seriousness that it requires, then our approach to tools for mitigating and addressing that inflation need to respect that it is a more complicated issue than just tariffs at the border.”

Regardless, the United States needs to take significant steps to counter China’s growing economic dominance in the region, and reduce our reliance on unethically sourced goods. That’s what the IPEF will hopefully do.

 As Ambassador Tai said, “When China speaks — people listen.”

The U.S. needs to make its own voice heard by supporting American workers and standing for fair trade principles. Hopefully, this new agreement has the teeth to make that possible.

To read more about the Biden Administration’s new Indo-Pacific Economic Framework, click here.

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