Biden Trade Plans Criticized by Senators as Lacking Ambition

(Bloomberg) -- U.S. senators from both parties criticized President Joe Biden's trade agenda on Thursday, faulting a shortage of ambition for negotiating new agreements and countering China in Asia.

In a hearing of the Senate Finance Committee, U.S. Trade Representative Katherine Tai faced Democratic and Republican senators concerned that the administration's proposed Indo-Pacific Economic Framework, or IPEF, is insufficient for boosting exports and countering China. Some also faulted the lack of plans for pursuing new free-trade deals.

Bob Menendez, a Democrat who heads the Senate Foreign Relations Committee, said he thinks that the IPEF is too limited, a concern shared by fellow moderate Democrat Maria Cantwell. Menendez questioned why Taiwan isn't included in the talks, while Cantwell asked why the framework doesn't have a specific mechanism for opening new markets to U.S. farm exports.

The framework plans are not “as robust as I think we need,” Menendez said. He bemoaned the decision under former President Donald Trump to abandon negotiations for the Trans-Pacific Partnership, which would have lowered tariffs for U.S. exports to foreign markets -- a traditional free-trade deal objective that isn't a goal of the IPEF.

Tai said that the U.S. is interested in negotiating new agreements with partners, but also in ensuring that “our trade agreements process evolves over time.” She also disagreed with the criticism the IPEF isn't sufficiently ambitious, saying that it will include innovative elements that people will appreciate with time.

“New things require some time for socialization and for people to appreciate where the economic meaning is going to come,” Tai said.

Tai said that the Biden administration is indeed opening markets, having removed or averted more than $20 billion in tariffs between the U.S. and the European Union. The U.S. last year negotiated a tariff truce for five years in a dispute over aircraft subsidies given to Airbus SE and Boeing Co. and a deal to ease U.S. tariffs on EU steel and aluminum and reciprocal tariffs on American goods.

The U.S. trade chief has repeatedly stressed that the administration is pursuing a “worker-centered” policy and put great emphasis on enforcement of existing deals, particularly on labor rights -- a focus praised at the hearing by liberal Democratic Senators Elizabeth Warren and Sherrod Brown. Tai last week called free-trade agreements a “very 20th-century tool.”

On Thursday, Tai said that “there is a place for free trade agreements in our toolbox,” but that even there the approach needs to be updated “to reflect the realities of today.”

Tai was a key architect of the labor provisions of the U.S.-Mexico-Canada free-trade agreement negotiated under Trump that went into effect in 2020.

Speaking to the House Ways and Means Committee on Wednesday, Tai said that it was time to stop only trying to change China's behavior and instead work on rebuilding the U.S. industrial manufacturing base and making domestic investments to counter the Asian nation.

Highlighting the range of views on trade in the Democratic Party, Warren warned at the Thursday hearing that the IPEF “cannot be TPP 2.0” and must include strong and enforceable labor and climate commitments.

Republicans Mike Crapo, the committee's ranking member, and Pat Toomey urged the administration to engage in free-trade negotiations, with Toomey saying that such deals support U.S. jobs by creating new opportunities for exports. Failing to pursue them, he said, would come at a “big cost” to the U.S.

The Biden administration has gained market access working outside free-trade agreements, including by lowering U.S. tariffs for pork exported to the Philippines and reducing duties on corn and wheat sold to Vietnam, said Adam Hodge, a USTR spokesman.