Retiring free traders lament protectionist turn on Capitol Hill


PROGRAMMING NOTE: We’ll be off next week for the holidays but back to our normal schedule on Tuesday, Jan. 3.

With help from Doug Palmer 

With only a few days left in the session, retiring free trade lawmakers are lamenting the coming protectionist turn in Congress and begging the Biden administration to change course from its first two years.

Internal strife is bedeviling the Biden administration’s plans for TikTok — with a key regulatory panel divided on whether to force the app’s Chinese owner to divest from it due to national security concerns.

— And U.S. Trade Representative Katherine Tai asked the International Trade Commission to investigate the impact of waiving intellectual property protections on Covid-related therapeutics, after saying earlier this month that the U.S. was not ready to sign on to support the waiver.

It’s Monday, Dec. 19. Welcome to Morning Trade. Some things truly do reach across borders, even in a time of increasing protectionism. Like when the entire bar stands up to applaud Argentina’s beautiful second goal in the World Cup final yesterday. We knew little of the roller coaster to come at that point, but the moment reminded me that football can be truly transcendental — a universal language. Hey, maybe globalization isn’t dead. And congrats to Messi. Send us your trade news: [email protected], [email protected], and [email protected].

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FREE TRADE NOSTALGIA IN CONGRESS: A number of free trade stalwarts are stepping down as this session comes to a close, from Sens. Pat Toomey (R-Pa.) and Rob Portman (R-Ohio) — himself a former U.S. Trade Representative — in the Senate, to former House Ways and Means Chair Kevin Brady (R-Texas) and moderate Democrat Rep. Stephanie Murphy (Fla.) in the lower chamber.

New, protectionist members: While there will still be plenty of free traders in Congress next term, a number of those market-expanding, tariff-lowering stalwarts will be replaced by new members more protectionist than them — part of a gradual slide away from the free trade consensus in the years since Donald Trump’s election as president.

Take Senator-elects J.D. Vance in Ohio and John Fetterman in Pennsylvania. Despite being from different parties, have both trashed the free trade deals of the past few decades on the campaign trail and called for new industrial policies to bring jobs back to the U.S.

Not all are ready to bow to that narrative, however. Portman, in a brief Capitol Hill interview, said he isn’t convinced Vance will hew to a more protectionist line in the Senate, despite his Trumpy campaign rhetoric. He laid the blame for protectionism’s rise more at the feet of the Biden administration, saying the White House’s refusal to initiate new trade deals had “shut us out” of countries like Ecuador, which is now negotiating a trade deal with China.

For Toomey, however, the contrast between himself and Fetterman was tough to deny. Though he was careful not to endorse the idea of a protectionist wave in Congress, he was clear about why he thought both parties have floated away from that consensus over the last half-decade or so.

“In the Senate the data set is so small that it’s probably more anecdotal than it is revelatory of a trend,” the retiring Pennsylvanian said. “But let’s face it. Donald Trump was a protectionist and the first Republican protectionist in a very long time. President Biden has been almost a complete and absolute extension of Trump policy on trade, despite running on a very different basis.”

“In both parties,” Toomey concluded, “there’s, I think, been some erosion of support for trade.

Free trade support “was always broader on the Republican side, but never unanimous. It was always narrower on the Democrat side, but it was always there. And yeah, it has diminished on both sides. And that’s something I hope can be reversed soon because trade is a really important driver of economic growth and prosperity.”

Over in the House, retiring members were more forthcoming with their takes on the changing policy landscape. Brady, in a farewell press conference last week, chalked the new protectionist streak up to a populist reaction to the financial crisis. He elaborated more on its consequences in comments outside the House chamber, saying that while he thought Republicans, by and large, still wanted to push for new trade deals, there has been “some change” in how the party view’s tariffs, and its disposition toward China.

“China’s going to be interesting, I think, for both parties” in the next Congress, Brady said. “There’s a lot of pressure to absolutely decouple from them. … I think lawmakers are gonna have to work through that — in both parties.”

“My view is, you engage with China where it’s in America’s interests. You don’t where it’s not,” Brady added. “So a discerning trade agenda with China, I think it’s going to be very important, but I think job number one has to be countering their economic aggression and their predatory trade practices.”

Murphy, however, was the most frank in her assessment of the new protectionist streak in Congress, with the Florida Blue Dog calling it a “huge detriment” to the U.S. economy.

“I think we are in a bad place from a trade perspective,” she said outside the House chamber. “And that hurts not only our domestic economy, but also our foreign policy.”

Murphy reiterated her hope that the Biden administration would request Trade Promotion Authority from Congress and revive the World Trade Organization’s moribund appellate body, which has been subject to an American block on new judges since the Trump administration.

“Put forward real proposals on how to reform [the WTO] and then nominate judges to the appellate body,” she said. “But if you don’t, if you’re blocking the judges to the appellate body, then I think your actions speak louder than your words as far as your intention for that body.”

BIDEN ADMIN DIVIDED OVER TIKTOK REVIEW: If you ducked out early to a holiday party, you might have missed it on Friday, but the Biden administration is facing another internal debate over China trade policy. This time it’s whether to force ByteDance, the Chinese owner of TikTok, to take a hike.

Those following will remember that the Committee on Foreign Investment in the United States has been examining (since the Trump administration) the national security risks associated with the video-sharing app, which defense officials worry could be used to surveil or disrupt American government or infrastructure.

TikTok has been working on a deal that would see ByteDance retain ownership of the app — albeit with an independent U.S. subsidiary with a separate board. But that proposal, despite being on the table for months, is still mired in debate between agencies on the CFIUS board.

Natsec pushing sale: National security agencies, including the Department of Defense and intelligence community, as well as the Department of Justice, have pushed for the Committee to issue an order requiring ByteDance to sell its U.S. TikTok operations to an American company, one in an allied nation, or set it up as a standalone company.

Treasury wary: But the Treasury Department, which chairs the CFIUS board, is wary of any outright divestment order, concerned it would face legal challenges similar to the Trump administration’s attempt to force a sale of the U.S. version of TikTok, which ran aground late in Trump’s tenure, leaving the issue to Biden.

Treasury is more amenable to the proposed compromise worked out with TikTok that would allow ByteDance to maintain at least nominal ownership of the app in the U.S. But if the board can’t come to an agreement on that plan, the most likely outcome is some sort of divestment order, according to officials close to the process. Read more from our Friday story here.

TAI REQUESTS 10-MONTH ITC COVID-19 IP STUDY: U.S. Trade Representative Katherine Tai followed through Friday on plans to ask the U.S. International Trade Commission to investigate a number of questions related to whether the WTO should waive intellectual property right protections for Covid-19 therapeutics and diagnostics.

The move came as members formally missed a deadline they set in June for deciding the issue and also failed to set a new deadline, keeping the issue in limbo.

Tai asked the ITC to report back by Oct. 17, 2023, on supply-and-demand conditions for Covid-19 therapeutics and diagnostics, as well as pricing and trade flows. She also directed the trade panel to explore a list of other questions, including whether and how existing WTO intellectual property “rules and flexibilities” can be deployed to improve access to medicines.

“I am not asking the Commission to draw any policy conclusions, but rather I am seeking a robust record with respect to these issues,” Tai said in her letter.

She encouraged the ITC to hold a public hearing and solicit a wide range of views, including from foreign governments, NGOs, manufacturers and organizations such as the Medicines Patent Pool and the Foundation for Innovative New Diagnostics.

— The U.S. is weighing Mexico’s proposed changes to corn import rules that threaten American producers, POLITICO reports.

— The yearly defense spending bill from Congress includes directives to align the U.S. with its allies against China, Nikkei reports.

— Covid outbreaks are wreaking havoc on Chinese workers – and global supply chains, the Financial Times reports.

— The U.S. is facing a lab monkey shortage amid a smuggling scandal in Cambodia, the Financial Times also reports.

— Foxconn is selling its stake in a Chinese chip giant in the latest show of the sector’s isolation, Bloomberg reports.

— The EU reached a deal on climate policy after marathon talks, POLITICO reports.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected], [email protected] and [email protected]. Follow us @POLITICOPro and @Morning_Trade.





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