On February 25, 2021, the Senate Finance Committee held hearings on the nomination of Katherine Tai to become the next United States Trade Representative. In her opening remarks, Tai made clear that her first priority would be to help American communities emerge from the pandemic and related economic crisis. With regard to trade specifically, she discussed the importance of a worker-focused trade policy. As part of that policy, she committed to pursuing approaches that “advance the interests of all Americans . . . recognizing that people are workers and wage earners, not just consumers.” In her written responses to questions, Tai elaborated that she would “seek to determine the impact of trade policies on workers’ wages and economic security and take that impact into account as we develop new policy.”
During the hearing, Tai cited several issues as major trade priorities if she is confirmed:
- China. Developing and executing a “strategic and coherent plan for holding China accountable” to its commitments, including the Phase One Agreement, and “competing with its state-directed economic model,” while still adhering to American values and recognizing the need to work with China “to address certain global challenges”;
- USMCA. Strongly enforcing the United States-Mexico-Canada Agreement;
- Supply Chains. Working with trusted partners to build resilient supply chains;
- Supply Chains. Rebuilding U.S. alliances, re-engaging with international institutions, such as the World Trade Organization, and imparting U.S. values to shape the rules guiding global commerce; and
- Competitiveness. “[M]aking investments in the American people and U.S. infrastructure in order to enhance U.S. competitiveness, promote U.S. innovation, and build more inclusive prosperity.”
Notably, potential renewal of Trade Promotion Authority was barely mentioned, either in the hearing or in the follow-up questions from members.
Committee members questioned Tai on a variety of topics, including: intellectual property rights protection, enforcement of the Phase One deal with China, forced labor, transparency of the Section 301 tariff exclusion process, the Section 232 tariffs on steel and aluminum, the Boeing-Airbus WTO dispute, USMCA enforcement (e.g., Canadian dairy TRQs and Mexican restrictions on U.S. agriculture and energy producers), and a potential UK-US trade agreement. Key responses (at the hearing and in her written responses) included:
- Trade as an Administration priority. Tai emphasized that trade would not be put “on the back burner” despite the intense focus on COVID-19 and economic recovery. She also signaled potential openness to working with Congress on new trade legislation that would strengthen U.S. competitiveness and strategic interests.
- First 100-day priorities. Tai flagged three topics as particularly critical: engaging with trading partners to address the climate crisis, ending unfair trade practices, and strengthening sustainable renewable energy supply chains.
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). When asked if the United States ought to consider joining CPTPP, Tai did not take it off the table. She stated that the basic premise of the agreement is “still a sound formula” but “a lot has changed in the world in the past five years” that needs to be evaluated as the Administration develops its trade policy consistent with the Build Back Better agenda.
- Trade agreement talks with Kenya and the United Kingdom. Tai indicated that she would consider the work that has been done thus far before moving forward with negotiations, but she did not discuss prospects or timing.
- Supply chains. Tai noted that USTR would actively engage in the interagency process that has been initiated by President Biden’s February 24th executive order on America’s Supply Chains. She committed to working with other agencies to address the serious transportation issues in the food and agricultural supply chain (e.g., container shortages) resulting from the current West Coast port congestion. She also promised to take action against any country that tries to cut off the United States from critical raw materials.
- Tariffs. Tai indicated that tariffs were “a legitimate tool” in the U.S. trade policy tool box and seemed to confirm expectations that the Biden administration would not be lifting tariffs imposed by the Trump administration any time soon. However, she noted that tariffs should be “appropriately responsive” to the unfair trade practices they are meant to address and consider the impact on U.S. businesses and their supply chains, as well as workers and consumers.” (Another formulation of this point was her commitment to review “the use of tariffs as a tool to address unfair trade practices to ensure that they are strategically employed to achieve their means and maximize the benefit, while minimizing the cost, to U.S. industries, workers, and consumers.”) She also indicated that resolving the Boeing/Airbus WTO dispute was a priority.
- SOEs. Tai promised a three-pronged approach to tackling State-owned enterprises: pursuing collective action with allies to address market distortions caused by SOEs, taking trade enforcement actions against countries that use them, and proposing SOE-related disciplines in trade negotiations.
- WTO Reform. Tai noted the importance of U.S. engagement in the world trading system and the need for WTO reform, but warned that it “will be difficult work that may take some time.” She signaled her openness to exploring non-MFN plurilateral agreements at the WTO, while noting the likely difficulties of overcoming strong developing country resistance to such agreements.
- MTB. Tai committed to working closely with Congress on renewal of the Miscellaneous Tariff Bill.
- Buy America. Tai committed to ensuring U.S. trade policy is consistent with the goals of the Made in America Executive Order “while recognizing the strategic and economic importance of our partnerships with Canada and Mexico.” She also promised a review of U.S. commitments under the WTO Agreement on Government Procurement.
- GSP. Tai committed to working closely with Congress on updating and reauthorizing the General System of Trade Preferences program.
- Climate. Tai noted that she would “pursue a trade agenda that supports the Biden Administration’s comprehensive vision of reducing greenhouse gas emissions and achieving net-zero global emissions by 2050, or before, by fostering U.S. innovation and production of climate-related technology and promoting resilient renewable energy supply chains.” She also committed to review the Section 201 tariffs on imported solar panels and cells in light of the Administration’s goals of increasing the use of renewables (such as solar) to combat climate change, safeguarding the security of U.S. supply chains for renewables, and promoting jobs and economic growth.
Tai also had a notable exchange with Senator Toomey on whether the goal of trade agreement negotiations was to eliminate all tariffs and other obstacles to trade. Tai noted that circumstances had changed over the past 5-10 years so the objective would likely depend on the specific agreement.
With strong support from most members of the Senate Finance Committee, as well as labor and industry stakeholders, Tai is expected to be confirmed easily by the Senate within the coming days.