U.S. Trade Representative Katherine Tai says America's trade policy should be focused less on increasing exports and more on leveraging access to U.S. markets as a means to influence foreign countries on issues such as environmental and labor standards.
America’s “superpower” isn't its ability to export but rather its economy, its hunger for imports, and the price it can extract from foreign countries for access into that market, Tai said last week in Washington.
“I always hear that … our focus should be on facilitating exports, pushing other people’s tariffs down, doing these free trade agreements,” Tai said during an event hosted by the Open Markets Institute at the National Press Club. “The issue is, if you look at the profile of the U.S. economy, while we may be only 5% of the world’s population, we are 30% of the world’s [gross domestic product] all by ourselves.
“And so what that means is: If we have a superpower, it’s actually not in exports and supplying. It’s in consuming. Understand your own power. If that’s the case … we should be focused on how do we leverage the power of access into our own markets.”
If access to the U.S. market can change a foreign nation’s behavior, she continued, “then we should be thinking about how to leverage that access to drive standards higher.”
A spokesperson for the USTR said the word “standards” typically refers to labor, environmental, intellectual property and risk- and science-based ag standards, but he stressed that Tai was speaking more broadly.
Rep. Dusty Johnson, R-S.D., says he’s concerned that the U.S. trade tactic will benefit China as it negotiates trade agreements.
“Representative Tai seems more concerned with (environmental, social, and governance) standards than competing in the global economy,” Johnson told Agri-Pulse in a statement. “While she wants to leverage our trade relationships to focus on emissions standards, we are handing over emerging markets to China. We should not allow China to become the favored trading partner of more and more countries.”
U.S. farm groups like the USA Rice Federation have expressed their support for Tai, but the organizations also stress the linkage of export opportunities to the survival and success of their member farmers.
“This USTR’s defensive approach toward American products makes sense, however in an efficient agricultural economy, exports are critical to support industries like U.S. rice,” USA Rice Vice President of Policy and Government Affairs Peter Bachmann told Agri-Pulse. “We would benefit from an approach that not only opens new markets through lower tariffs abroad, but also holds rice imports to the same standards as our product — World Trade Organization compliance and food safety standards.”
The ability of the U.S. to increase exports — especially when it comes to commodities like rice, corn, soybeans, beef and pork — is crucial to producers and the American economy overall. About half the rice grown in the U.S. is exported.
“Ambassador Tai is right to say that access to the U.S. market is a source of leverage in negotiations with some countries,” said Sharon Bomer Lauritsen, founder of AgTrade Strategies and former assistant USTR for agricultural affairs and commodity policy. “But the strength of the U.S. market that Ambassador Tai highlights is built also on the strong economic benefits of U.S. exports.
Sharon Bomer Lauritsen, AgTrade Strategies“The United States’ $3 trillion in exports support 9 million U.S. jobs. For U.S. agriculture alone, 1 million jobs are supported by $150 billion in U.S. food and agricultural exports. The strength of the U.S. economy and market is a two-way street — imports and exports.”
While Tai may be signaling a shift in trade policy by focusing of using the U.S. market as a means to exact change, USTR also continues to rack up trade wins for U.S. agriculture, several of which were highlighted by Chief U.S. Agriculture Negotiator Doug McKalip in remarks earlier this month at the Agri-Pulse Food and Ag Issues Summit West.
Earlier this year, Japan implemented measures to make it less likely that a safeguard trigger would boost tariffs on U.S. beef, McKalip said. Japan also agreed to policies that are expected to increase the country’s imports of U.S. ethanol by $200 million. Furthermore, he said, India agreed to slash its tariffs on pecans and Bangladesh agreed to lift its requirement that baled cotton from the U.S. be fumigated on arrival. USTR is also in the thick of a dispute process with Mexico over its biotechnology policies and the country's blockage of genetically modified white corn imports.
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Still, the fact that the Biden administration has been steadfast in its refusal to negotiate traditional, tariff-reducing agreements to bolster U.S. exports by making them more competitive continues to frustrate some lawmakers and farm groups.
Negotiating new free trade agreements, or FTAs, that bring down both tariff and non-tariff barriers are key to the U.S. pork industry, which exports a quarter of its production, Lori Stevermer, president-elect of the National Pork Producers Council said in a May hearing hosted by the House Agriculture Subcommittee on Nutrition, Foreign Agriculture, and Horticulture.
“Since 2000, pork exports to FTA countries have increased 913%, and in countries where the United States has negotiated preferential market access and where tariffs were slashed, pork exports increased tremendously,” Stevermer said.
Tai has gotten accolades from the U.S. ag sector for negotiating the 14-nation Indo-Pacific Economic Framework that USTR promises will tear down non-tariff trade barriers to U.S. farm commodity exports, but there are still groups and lawmakers demanding FTAs to address foreign tariffs like those in Vietnam that put a 14% tax on U.S. beef.
IPEF includes the U.S., Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
Tai, addressing a Senate Finance Committee hearing in March, confirmed the U.S. does “not have tariff liberalization negotiations going on with a partner” and stressed that while traditional FTAs have been “very good for our agricultural producers, the other parts of our economy feel like the playing field is not level.”
But the U.S. needs to counter both tariff and non-tariff barriers because foreign customers still “make buying and selling decisions based on price,” said Bomer Lauritsen.
“Without a trade agenda that also advances U.S. economic interests by addressing barriers to U.S. exports through free trade agreements, the United States will lose influence globally,” she added. “Other countries welcome U.S. products and benefit from the two-way relationship that free trade agreements promote. The U.S. government’s trade policy should be comprehensive, not just looking at the leverage that the U.S. market provides, but by strengthening our global economic presence through proactive policies that support our export competitive industries such as U.S. food and agriculture.”
As to the U.S. making an impact on foreign standards, Bomer Lauritsen said: “With a strong U.S. market and vibrant and competitive U.S. exports, the United States can maintain its leverage to drive standards.”
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