USTR Katherine Tai Reiterates New Ideas On Trade In Financial Times Editorial

U.S. Trade Representative Katherine Tai took to the Financial Times this week to re-state her position, and President Biden’s, that from now on, global trade has to benefit the common good. That should resonate with CPA members because it means a trade policy that seeks to boost domestic production, protect American workers from predatory activity, and promote the creation of good-paying jobs. This idea has emerged over the last ten years, even stemming from pro-globalization forums like the World Economic Forum – where “stakeholder” capitalism became a thing. For Tai, one of the crucial stakeholders from a U.S. trade perspective is the worker; a stakeholder rarely considered and most often harmed by global, corporate outsourcing to low-wage manufacturing nations like Mexico and China.

“Trade policy has long followed the trickle-down approach that has been so common over the past four decades. But if we recognize that deferring to the market has its limits in ensuring that domestic economic policy benefits working people, we must also recognize its limits to do the same when it comes to trade,” Tai wrote in the FT.  

[The USTR has the full op-ed published on its website here.]

For the last four years, Tai as Biden’s lead trade diplomat has said in countless hearings in the House and Senate that trade deals must consider the impacts on American labor. 

The Atlantic Charter of 1941 provides a guidepost on that topic, she said in the FT. “It stated that international economic cooperation is to be pursued with the object of securing, for all, improved labor standards, economic advancement, and social security. This is not a call for trickle-down economic policy, but a call for economic policy to serve the interests of working people.”

Globalization has allowed businesses to maximize their gains by lowering costs in other countries, usually those with much lower labor costs, weak to non-existent environmental regulations, and beneficial tax schemes that favored offshoring manufacturing. 

“While profits and executive pay soared, workers were left behind,” Tai wrote. 

Meanwhile, concentrated production emboldened monopolistic behavior by countries such as China. “The American economy has been and remains an open one. That, however, has meant that American workers were particularly exposed to the harms from such behavior,” she said.

In October 2022, the International Trade Commission (ITC) published a report entitled “Distributional Effects of Trade and Trade Policy on U.S. Workers.” The ITC is a bipartisan federal agency charged with evaluating trade policies and making subsequent recommendations to Congress with regards to their findings.  The report, covered by CPA in November of that year, outlined significant adverse effects brought about by the shift of manufacturing from the U.S. to other countries. After thoroughly analyzing academic and industry literature concerning manufacturing, the ITC came to a few firm conclusions concerning the offshore manufacturing shift – saying that the most harm was felt among non-college educated workers (majority of Americans), women, and Black and Latino workers.