A Full Plate for the New US Trade Czar
The newly confirmed U.S. trade representative, Katherine Tai, is about as qualified as a person can be for the job. Which is a good thing, because she will immediately face a series of challenges.
They won't necessarily be the trade issues that grab the biggest headlines, like tough new negotiations with major rivals. In fact, one of the most important tasks ahead for Tai is simply enforcement of existing deals with close U.S. trading partners.
Well-thought-out, well-enforced trade deals benefit all Americans, ensuring lower prices for consumers, higher earnings for businesses, and protections for workers and the environment. As the president's main advisor and negotiator on trade, Tai is charged with making sure these agreements work like they're supposed to. Her success will be crucial to our country's post-pandemic economic recovery.
For starters, America's neighbors to the North and South may be undermining the United States-Mexico-Canada Agreement — the USMCA — which entered into force just last year. As chief trade counsel for the House Ways and Means Committee, Tai herself helped take the deal across the finish line.
Now, though, legislation advancing in Mexico threatens to close off foreign investment in the country's energy sector, which would violate its USMCA commitments, while U.S. dairy farmers are concerned that Canada has failed to open its dairy market as promised.
Farther afield, U.S. companies operating in Japan are concerned that its government discriminates against American car and drug makers.
Auto manufacturers say that overly strict safety testing requirements keep American firms from expanding into the Japanese market. Pharmaceutical companies, meanwhile, face opaque decision-making and last-minute policy changes that discourage them from introducing new medicines in Japan. Tai can address these issues by negotiating a deal that includes enforceable protections for intellectual property.
Virtually all U.S. sectors are affected by international trade, and that includes the 2.5 million American workers supported by our film and television industry. In Indonesia, the fourth most populous country in the world, the government requires movie theaters to commit nearly two-thirds of their screens to domestically produced films. It even bans dubbing foreign films. These restrictions limit Hollywood studios from licensing and marketing movies in this fast-growing market of 270 million citizens.
At the same time, trade enforcement is a challenge in U.S. relations with India, the world's second most populous country with nearly 1.4 billion people. In particular, weak copyright and patent enforcement discourages companies in fields from entertainment to biopharmaceuticals from expansion in the world's largest democracy.
Intellectual property is also a problem in Brazil, the United States' biggest trading partner in South America, where the government is considering legislation that would invalidate thousands of American patents.
Of course, the chief trade negotiator handles not just bilateral relationships with foreign governments but also diplomacy at the World Trade Organization, the 164-member body that regulates so much international trade.
The Indian and South African governments recently petitioned the World Trade Organization to waive intellectual property protections on vaccines and treatments for Covid-19. Their wish to act is understandable, as we grapple with a once-in-a-century global health crisis. But besides the fact that gutting patent rights wouldn't speed vaccine distribution, the proposal would have a dire long-term impact on global intellectual property rights. It would undermine every U.S. firm that relies on these rights when investing in drug development.
By all accounts, Tai, who served for seven years in the Office of the U.S. Trade Representative, is a skilled negotiator. And the United States has strong bilateral relationships for her to build on as she faces off with foreign counterparts.
But the stakes are high, and time is short. Strong trade enforcement means robust trade, which translates into more high-paying U.S. jobs. Addressing trade tensions with allies -- like Canada, Mexico, Japan, India, Indonesia, and Brazil -- will jump-start the U.S. economy as we recover from Covid-19. We're counting on Tai to deliver.
Rodney Emery is a principal at Squire Patton Boggs and former director of congressional affairs for the International Trade Administration (ITA) within the U.S. Department of Commerce.