Republican takeover could embolden Biden trade agenda

Republicans are expected to push President Joe Biden toward a more active trade liberalization agenda if they capture control of the House, and possibly also the Senate, in next week’s congressional elections.

And Biden may jump on the opportunity, if he finds his domestic agenda stymied by Republican obstructionism.

“If the House does flip, that means that the Biden domestic agenda is gonna be stuck,” said Rep. Ron Kind, a pro-trade Democrat from Wisconsin who is retiring this year. ”So where does he go? He goes to foreign policy, and he goes to potential trade issues that you might garner some bipartisan support for.”

The shift in power could make it easier for the Biden administration to pivot from a policy strategy that has veered away from negotiating traditional free trade agreements over concerns about losing support from union and other blue collar voters who responded favorably to former President Donald Trump’s attacks on the pacts.

Farmers, who traditionally vote Republican, may benefit from other countries lowering their tariffs to American goods, but U.S. manufacturing workers have borne the brunt of too much tariff liberalization, U.S. Trade Representative Katherine Tai has argued.

Trade with depth: Republicans became more skeptical of free trade agreements under Trump. But a party veteran, who also plans to retire from the House at the end of this year, said he believes much of the anxiety in Congress over trade is driven by concern about China — and the Biden administration’s passive negotiating agenda is making it worse.

“Given China's economic aggression throughout the world, I think the president's moratorium on free trade agreements hurts America's economy and weakens our influence throughout the world,” said Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, who has played a leading role in passage of free trade agreements under both Republican and Democratic presidents.

Both Kind and Brady point to the huge bipartisan vote for the U.S.-Mexico-Canada Agreement negotiated by the Trump administration as evidence of support for a more activist trade agenda. That pact, which updated the quarter-century-old North American Free Trade Agreement, passed 385-41 in the House, with 193 Democrats and 192 Republicans voting yes.

In separate interviews, the bipartisan duo argued the Biden administration should use the USMCA template, which contained tough new labor enforcement provisions, to get back into the game of negotiating free trade agreements, particularly in the fast-growing Indo-Pacific region, where Trump damaged U.S. standing by pulling out the Trans-Pacific Partnership.

That offers a “bipartisan path forward,” but “I worry that the President will reject those efforts and continue what I would describe as 'shallow trade' to avoid any real enforceable trade agreements,” Brady said, referring to Biden initiatives such as the proposed Indo-Pacific Economic Framework, where the United States has taken tariff cuts off the table.

The administration needs a more muscular trade initiative in the Indo-Pacific, such as trying to rejoin the TPP, because it will be hard to persuade the 13 countries participating in the IPEF negotiations to make meaningful commitments to raise standards, especially in areas like labor and the environment, unless the United States is willing to open its market to more of their goods, Kind added.

A push to bring back TPA: The Wisconsin lawmaker was just one of 28 House Democrats who voted in 2015 to give then-President Barack Obama “trade promotion authority” so he could conclude negotiations on the TPP, putting him at odds with many other party members even though they eventually joined him in voting for the USMCA.

So far, Biden has resisted calls from House and Senate Republicans to request trade promotion authority, which allows for expedited congressional approval of trade deals and is seen by other countries as a signal of serious U.S. intent. But Kind said he believes there is a chance Biden could request the authority in the coming congressional session.

If not, it won’t be for lack of Republican pressure, said Everett Eissenstat, a former Trump White House trade official who now is North America chair and global economic security lead for Edelman Global Advisory, a consulting firm.

“With a House Republican leadership, you will see more emphasis on TPA and trade than you would otherwise. It's a key differentiator between the parties and there are members who feel very strongly that we need to be engaged internationally and that the tools we have on the table are not adequate to do that,” Eissenstat said.

There’s also precedent for Democratic administrations that are initially averse to free trade negotiations to change their minds as they come to see the agreements as a way to shore up U.S. relationships with friends and allies.

“A lot of Democratic administrations have come in and said ‘we're not going to do trade’ and that market access agreements are not a priority, and then at the end of their administration it ends up being one of their major initiatives. That certainly was the case with President Obama,” Eissenstat said.

“My experience tells me that countries love to have summits, they love to engage with the United States, but what they really want is market access and to trade with us,” he added.

If Biden does pivot, Tai's popularity with both parties in Congress could bode well for bipartisan cooperation. The former House Ways and Means chief trade counsel was confirmed 98-0 by the Senate and Brady himself helped introduce Tai at her Senate Finance Committee confirmation hearing.

Whatever the outcome of Tuesday's election, “the Biden Administration will continue to develop and implement its robust trade agenda and work with Members of Congress on both sides of the aisle to create durable trade policy that creates jobs and increases prosperity for workers and businesses," USTR spokesperson Adam Hodge said in an email.

Increased scrutiny: But even if Biden remains unwilling to push for TPA or pursue new free trade agreements, he would face pressure from a Republican-controlled Congress to clarify his goals in non-tariff negotiations launched with the IPEF countries, Taiwan, U.K., Kenya and more recently Ecuador, said Nasim Fussell, former chief international trade counsel for Republicans on the Senate Finance Committee.

“There's probably going to be a really hard push, within the broader sort of political push for more oversight, to get the administration to talk more precisely about what they are doing on trade,” Fussell said. There will be a demand for “more consultations with Congress and members will continue to ask, ‘why no market access?’ They will want an answer to that.”

Even though Trump pulled out of TPP, there also could be some pressure from Republicans for the Biden administration to figure out a way to get back into the agreement, which the 11 remaining members rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP.

“That's going to be a very difficult conversation, but certainly worth having in my opinion” because China’s increasingly aggressive trade and military posture makes the national security argument in favor of the agreement even stronger than when the Obama administration initially negotiated the pact, Fussell said.

Brady agreed “there is strong Republican support for engaging aggressively in the Asia Pacific region,” but said there are other ways of pursuing that short of rejoining the TPP, such as following through on the Trump administration’s promise to negotiate a comprehensive trade agreement with Japan.

“I think that would be a very strong signal that we are serious as a country about engaging the Asia Pacific region,” Brady said.

The China factor: Republicans also want the Biden administration to enforce the “phase one” trade deal that Trump reached with China, Brady said, noting that Republican Leader Kevin McCarthy has promised to create a China task force to examine the full breadth of the U.S. relationship and rivalry with the Asian superpower.

“I think that's an important step forward, that addressing China more successfully will increase confidence in the benefits of trade overall,” Brady said. "I'm convinced the Biden administration walked away from [the phase one agreement]. China isn't going to comply if they think America is not really interested in that."

Republicans have also signaled their intention to scrutinize trade policy decisions that they oppose, such as a global tax treaty reached in 2021 and the Biden administration’s support for a limited waiver of intellectual property protection for Covid-19 vaccines.

Bait-and-switch: But Kind said he worried GOP oversight could potentially set up a worst-case scenario, where Republicans are so intent on undermining Biden that nothing gets accomplished on trade.

“They’ll call it oversight, but it will be Republican criticism. That won’t engender much confidence as far as moving forward on trade promotion authority, for instance, or other trade measures where we're going to need bipartisan support," Kind said.