In One Sentence

• The Biden administration’s new National Security Strategy emphasized “inclusive trade” and growing the “connective tissue” of technology, trade and security between allies and partners.  
• U.S. Trade Representative (USTR) Katherine Tai said the IPEF’s lack of market access provision is a “feature” to address past mistakes and persistent issues as well as the “growing inequality” caused by globalization. 
• A senior White House official called on U.S. agencies to put “real dollars” and effort behind IPEF, G7 and other U.S. trade initiatives to support U.S. exporters and improve the lives of people around the world. 
• A leaked European Commission report marked artificial intelligence, semiconductors, infrastructure financing in third countries, digital platforms, human rights and clean technology as potential deliverables for the U.S.-EU Trade and Technology Council (TTC), but warns of a growing mismatch between potential and tangible results. 
• The U.S. is conducting a “real conversation” with the European Commission and South Korea over “deep” concerns about the allegedly discriminatory electric vehicle and renewable energy tax credit contained in the Inflation Reduction Act.  
• The U.S. and EU are actively discussing U.S. concerns about European policies on data and the digital economy.

Mark the Essentials

• USTR Tai highlighted that the Biden administration has not “sworn off” market access and trade liberalization efforts, but instead argued that liberalization and tariff elimination cannot happen “at the cost of further weakening our supply chains, exacerbating high-risk reliances, decimating our manufacturing communities, and destroying our planet.”
• Contending that initiatives like IPEF is “no substitute” for traditional trade agreements, House Ways & Means Committee Trade Subcommittee ranking member Adrian Smith argued that the administration’s lack of a “robust and proactive trade strategy” has exacerbated economic problems such as inflation and high fuel costs.  
• Civil, labor and religious groups have criticized the IPEF for its lack of transparency, noting that the confidentiality agreements over IPEF documents are even more extensive than the equivalent ones at the time of the mid-2010s Trans-Pacific Partnership (TPP) negotiations. 
• According to a former U.S. trade official, the Biden administration’s reluctance to pursue trade liberalization, accompanied with a strong focus on the interests of U.S. workers, will make it difficult to secure buy-ins from allies and partners, especially on broader agenda items concerning climate change, sanctions on Russia, and a common front against China.

Keeping an Eye On…

• Fall is here, which means the season of trade policy conference diplomacy is upon us as well. Over the next two months, there will be ministerial-level meetings of the U.S.-EU Trade and Technology Council (TTC), the Indo-Pacific Economic Framework (IPEF) and the Asia-Pacific Economic Cooperation (APEC) grouping, among others. Substantive progress has been slow to come by so far; particularly within the TTC’s five annexed statement areas and 10 working groups (with the exception of export control cooperation vis-à-vis Russia) that were inaugurated with much fanfare in Pittsburgh on September 29, 2021. As for the IPEF trade pillar, the Biden administration released its “negotiating goals” in late-September, which are categorized as ‘resilience, inclusion, and sustainability.’ They could also be listed as ‘decouple, protect(ionism), and regulate,’ respectively. About the only common element listed in the ministerial statements across the four pillars of IPEF is the intention to promote labor rights based on the ILO Declaration on Fundamental Principles and Right at Work. This in and of itself is of no issue; nobody is ever going to be against it. But prioritizing labor over (trade) liberalization in the name of “inclusive trade” does not bode well insofar as a trade agreement is concerned. Furthermore, the administration’s overly ‘worker-centric’ focus will soon hit a wall in Asia when the IPEF negotiations begin in earnest. In all fairness, U.S. Trade Representative Tai is likely to face just as much pushback on the domestic front given that the design and contents of IPEF is as cryptic to members on Capitol Hill. IPEF bears only passing resemblance to an economic and trade agreement, at this time. When President Joe Biden addresses the APEC CEO Summit in Bangkok in mid-November on his trade policy philosophy and plans, perhaps more clarity will be available.

Expanded Reading

• FACT SHEET: The Biden-⁠Harris Administration’s National Security Strategy, The White House, October 12, 2022
• Biden’s contradictory goals set to collide at G-20 and APEC by Stephen Olsen, Hinrich Foundation, October 11, 2022
• 64th NABE Annual Meeting Shocks and Aftershocks, Event by National Association for Business Economics, October 9-11, 2022
• Remarks by Ambassador Katherine Tai at the Roosevelt Institute’s Progressive Industrial Policy Conference, Office of the United States Trade Representative, October 7, 2022
• Squandering an opportunity on trade by Rep. Adrian Smith, The Hill, October 5, 2022
• IPEF confidentiality rules revealed, Politico, October 3, 2022
• IPEF Secrecy Agreements Undermine Biden Administration’s Claims of a New Trade Model, Public Citizen, October 3, 2022
• EU Commission sets member states’ expectations for next transatlantic meeting, Euractiv, October 3, 2022