SASKATOON — U.S. Trade Representative Katherine Tai was taken to task in her recent appearance before the U.S. Senate’s finance committee to discuss the president’s 2024 trade policy agenda.
Tai was grilled about why president Joe Biden’s administration has abandoned the free trade agreements that farmers love.
“You say we’ve got a different approach to trade, and I understand that approach is grounded in things other than market access,” said South Dakota senator John Thune.
“There isn’t a single FTA that this administration has entered into.”
Tai said the administration has decided to “score singles and doubles” rather than going for the home run.
“Market access can come more quickly, more efficiently and in more agile ways,” she said.
For instance, India and the United States agreed last June to terminate six World Trade Organization disputes.
In response, India agreed to remove retaliatory tariffs on several U.S. products, including chickpeas and lentils.
Thune is one of 21 senators who sent a letter to Tai and U.S. agriculture secretary Tom Vilsack in March urging the Biden administration to change course on trade.
They noted that the U.S. agricultural trade deficit is expected to reach a record US$30 billion in fiscal year 2024.
“While the Biden administration continually refuses to pursue traditional free trade agreements, China, Canada, the European Union, the United Kingdom and others continue to ink trade pacts that diminish American export opportunities and global economic influence,” stated the letter.
In the hearing, Thune noted that U.S. net farm income fell $30 billion last year and is expected to tumble another $39 billion this year as input costs rise and commodity prices fall.
“One of the things that affects commodity prices is demand, and the way you create demand is to open markets,” he said.
Thune asked Tai why she doesn’t pursue “easy” FTAs like ones with the U.K. and the EU.
“There are no easy FTAs,” was Tai’s response.
She noted that the U.K. and Canada recently halted FTA discussions because the U.K. refused to talk about agricultural market access.
The U.S. encountered similar roadblocks in past discussions with the EU.
Thune warned Tai that the administration’s unwillingness to pursue FTAs is a big irritant for farmers.
“They don’t think that the administration gets it — that we’ve got to be opening up more markets,” he said.
“You focus on all these peripheral issues, none of which are at the core of why we can’t get access to some of these markets around the world.”
John Cornyn, a senator from Texas, asked Tai why she has abandoned FTAs in favour of “framework” agreements that lack market access provisions and enforcement.
“The traditional FTAs that we negotiate continue to pit Americans against Americans and sectors against sectors in a way that is entirely unsustainable,” said Tai.
Cornyn said the result of the new approach to trade is there are no enforcement mechanisms to ensure U.S. producers are not harmed by huge subsidies in importing countries.
Tai countered that the Biden administration has secured $21 billion in new market access for farmers through other means.
Cornyn noted that China is using the WTO to dispute provisions of the U.S. Inflation Reduction Act and wondered why the U.S. isn’t using the same body to challenge China’s massive agricultural subsidies.
“It has been ineffective,” was Tai’s response.
“We no longer do the things that aren’t effective.”
Marsha Blackburn, a senator from Tennessee, said she has cotton and soybean producers in her state who wonder why China is being allowed to ignore its previous Phase 1 agreement commitments.
“Unfortunately, when they look at USTR and this administration, they don’t see people who are going to bat for them,” she said.
Blackburn wondered why there have been no new WTO cases brought against China.
Tai said that is a narrow way of viewing things, noting that the administration has ensured there has been no new retaliation by China against U.S. farmers.
Steve Daines, a senator from Montana, said he is concerned about the administration’s “unambitious trade agenda” and the growing trade deficit.
He wondered what the administration is doing to reverse that deficit.
Tai said trade deficits happen from time to time and blamed it on the strong U.S. dollar and robust consumer demand, noting that there have been record U.S. agricultural exports in recent years, but imports are also on the rise.
She added that the U.S. was recently successful in opening the Japanese market to more U.S. beef and ethanol.
Daines said a priority for the administration should be re-engaging on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Robert Menendez, a senator from New Jersey, also weighed in on that issue.
He said there is a “nearly universal consensus” among trade experts that the U.S. cannot meet the challenge posed by China without robust FTAs in the Indo-Pacific region.
Tai agreed that it is important to have strong trade relationships in that region, but she doesn’t think the CPTPP is the way to do it.
“So many of the existing supply chains have links in and through China,” she said.
“It is really about supply chain diversification as opposed to all of us, through these trade agreements, further entangling ourselves into the existing Chinese supply chain.”
