With help from Ximena Bustillo
Editor’s Note: Weekly Trade is a weekly version of POLITICO Pro’s daily Trade policy newsletter, Morning Trade. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.
— Wednesday is the big trade policy day this week, with U.S. Trade Representative Katherine Tai testifying at the Senate Appropriations Committee hours before President Joe Biden gives a State of the Union-style speech to Congress.
— The White House is considering proposals for border carbon adjustment tariffs, which would put duties on goods from nations without climate change regulations, climate envoy John Kerry said last week.
— And progressives like Sen. Bernie Sanders are stepping up their pressure on Biden to support a WTO proposal to waive intellectual property rights for Covid vaccines, while allies of the pharmaceutical industry say it would do little to help developing nations access more shots.
It’s Monday, April 26. Welcome to Weekly Trade! Hard to believe that an entire European continental soccer league was announced and disbanded since I was last your newsletter host! While you can assuredly count me among the millions of fans who cheered the Super League’s demise, it means this season actually does matter now, which makes Liverpool’s dwindling Champions League chances a bit harder to swallow. Hopefully club owner John Henry feels guilty enough about his leading role in the Super League misadventure to freshen the squad up this summer.
TAI HEADS TO THE SENATE: Much of this week’s trade agenda comes to a head on Wednesday, when USTR Katherine Tai is slated to testify before a Senate Appropriations subcommittee on the agency’s funding and policy priorities for fiscal year 2022.
Manufacturing on deck: With the Senate busy debating Biden’s infrastructure package and numerous bills to combat China, expect lawmakers to bring up USTR’s role in rebuilding U.S. manufacturing, especially for critical industries like semiconductors and batteries.
China, too: The status of USTR’s review of the U.S.-China trading relationship is sure to be another hot topic for the Subcommittee on Commerce, Justice, Science, and Related Agencies, headed by Sen. Jeanne Shaheen (D-N.H.).
The administration has so far been tight-lipped about the outcomes of that review, particularly whether President Joe Biden will lift tariffs that President Donald Trump imposed. But some of his deputies, like Commerce Secretary Gina Raimondo, have offered qualified support for the duties in recent weeks, saying that they have protected some U.S. jobs, particularly in the steel and aluminum sectors.
No going back: Tai has yet to give any substantive comments on the tariffs themselves, or how she will look to engage the Chinese in future trade talks. But on Friday, she told Marketplace that the old days of trading amity with Beijing are not coming back.
“Regardless of whose administration would have been in charge in the years 2017 to 2021, the U.S.-China trade relationship had been on track to take a significant turn,” she told the nationally syndicated radio show.
The rest of that interview was a masterclass in Tai’s noncommittal interview style, nodding at her oft-repeated aim to build labor and environmental standards into new trade deals, but never getting pinned down on specifics.
“I think that is the way the global economy needs to evolve,” she said. “We need to build in incentives. And when we talk about incentives, we’re talking about carrots and sticks. So in some ways, what we need to do is figure out how we need to re-devise those carrots, maybe the shape of the carrots, when they’re applied.”
Ways and Means next: Tai will head to House Ways and Means early next month, though a date has yet to be set. On Thursday, that committee’s trade panel will have a hearing on U.S. economic competitiveness, which is sure to focus largely on infrastructure and China.
Big Commerce markup: While Tai is testifying, the Senate Commerce Committee will be marking up a litany of bills on Wednesday, including the Endless Frontier Act, which Majority Leader Chuck Schumer reintroduced last week with Sen. Todd Young (R-Ind.). Schumer wants to combine that bill with other China competitiveness measures and bring a package to the floor this spring.
KERRY SAYS BIDEN CONSIDERING BORDER CARBON TARIFFS: The administration’s most substantive trade policy comment last week came not from Tai, Raimondo or national security adviser Jake Sullivan, who drives international economic policy from the White House. It was from climate envoy John Kerry, who said Friday that Biden is considering imposing tariffs on countries that do not commit to fighting climate change.
“President Biden, I know, is particularly interested in evaluating the border adjustment mechanism,” Kerry told Bloomberg Television. “He wants to look at that and see whether that’s something that we need to deploy.”
Biden endorsed the idea of border carbon adjustments on the campaign trail, but its only mention from the administration since he took office was in USTR’s trade policy report in March, despite ongoing talks among EU nations about imposing such duties. Kerry said the administration is watching those efforts keenly.
The idea is a favorite of House Ways and Means Trade Subcommittee Chair Earl Blumenauer (D-Ore.), who has a bill that would impose border carbon tariffs along with a carbon tax on domestic fossil fuel production. But that measure is unlikely to see the light of day on its own, given the sticky politics of putting a price on carbon.
BIDEN SOTU-ESQUE ADDRESS THIS WEEK: The White House is prepping for a State of the Union-style speech before Congress on Wednesday. That speech is likely to focus heavily on domestic policy, including the pandemic and infrastructure bill, but look for Biden to frame his pitch for higher federal spending by saying it is necessary to confront China.
Georgia trip: The following day, the White House says Biden will travel to Georgia, the state that delivered the Democrats’ Senate majority. No word on whether he will mention the battery plant in the city of Commerce that was recently saved from an international trade dispute.
Euro trip in June: Biden will head to Cornwall, England, for the G7 from June 11-13, the White House said last week, in what will be his first overseas trip as president. He will then continue on to Brussels for a NATO summit on the 14th.
EU chip discussions on deck: Separately, EU Commissioner Thierry Breton will meet with chipmakers Intel and TSMC this week as European nations look for ways to make more microchips at home, as the U.S. is doing.
SANDERS STEPS UP VACCINE WAIVER PRESSURE: Progressive lawmakers at home are stepping up pressure on him to waive intellectual property protections for Covid-19 vaccines. On Friday, Sen. Bernie Sanders (I-Vt.) led a group of lawmakers who turned in petitions signed by more than 2 million Americans asking Biden to support a waiver requested by developing nations at the WTO.
“We have the tools to save human lives, and those tools should be readily available to all people,” Sanders said at the news conference along with Sen. Tammy Baldwin (D-Wis.) and Reps. Chuy García (D-Ill.) and Jan Schakowsky (D-Ill.) and Blumenauer. “Saving perhaps millions of lives is more important than protecting [the pharmaceutical industry’s] already excessive profits.”
The Biden administration has so far resisted calls to lift the IP rights and an informal WTO meeting last week on the issue gave no indication of an outcome.
WILL MEXICO FINALLY DECIDE ON U.S. POTATOES? The Mexican Supreme Court has placed the U.S. potato case back on the docket for Wednesday, and U.S. growers, activists and lawmakers hope a decision will come once and for all.
The cliffhanger: A draft ruling was released by the Supreme Court in February in favor of expanding the market access of fresh potato exports to Mexico past the first 16 miles from the border — where they are currently limited to. But the justices decided to postpone the final vote indefinitely, leaving stakeholders without an answer.
USMCA threats: Mexico had originally banned continued export of fresh potatoes to the rest of the country over pest concerns, which the Mexican government later withdrew. But a local potato company successfully sued to keep U.S. potatoes out.
Advocates and lawmakers in the U.S. say that this is a violation of the United States-Mexico-Canada Agreement and have threatened to urge USDA and USTR to launch an investigation, one they say the U.S. will ultimately win, giving the U.S. retaliation power.
— Western brands are struggling with Chinese backlash to forced labor claims, CNBC reports.
— ASEAN leaders pressured Burma’s military government to stop its violent crackdown on protests, the Associated Press reports.
— The South China Morning Post looks at why it’s so hard to verify forced labor reports in China.
— The Australian Broadcasting Company illustrates the damage of that nation’s trade war with China.
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