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.