USTR Katherine Tai under pressure on Asia-Pacific trade pact

US Trade Representative Katherine Tai came under pressure in Senate negotiations aimed at bringing America into the Asia-Pacific trade pact that Washington withdrew from in 2017 and faced backlash for her backing of a proposal to waive coronavirus vaccine patent protections.

Tai’s hearing before the Senate Finance Committee reflected strong bipartisan support for talks regarding the Trans-Pacific Partnership (TPP) that was revised by the remaining 11 signatories including Japan, Canada and Mexico after former president Donald Trump pulled the US out and came into effect as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018.

“A number of us have talked about the TPP, whether in some revised and updated form, but the geopolitics of that seem very obvious as well as the economic benefits,” said Senator John Cornyn, a Republican from Texas.

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US Senator John Cornyn speaks during a hearing with US Trade Representative Katherine Tai before the Senate Finance Committee in Washington on Wednesday. Photo: Reuters

“The one thing that we have in the United States that China does not have is friends, and I think it will do nothing but enhance our national security and our economic security by banding together with like minded countries in the region.”

China’s exclusion from the TPP, negotiated during the administration of former president Barack Obama, was a key attribute for the US and other countries looking to check the regional influence Beijing had been gaining in tandem with its economic growth, even if such sentiments were never openly expressed.

As voter sentiment turned sharply against global trade in the run-up to the 2016 presidential election, Trump made withdrawal one of his first official acts.

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Beijing then integrated itself more deeply into the region’s trade ties last year as leaders from China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations (Asean) ratified the Regional Comprehensive Economic Partnership (RCEP).

Mike Crapo, the senior Republican on the Senate committee called RCEP “China’s model for what trading relationships in the region should look like”.

“In the absence of US leadership in the region, our allies will have to look elsewhere,” said the senator from Idaho. “If the United States has to pursue a worker-centred trade policy we need to be mindful that American workers lose when China writes the rules.”

Benjamin Cardin, a Democrat from Maryland raised the same concern.

“It’s important that we expand our trading opportunities with countries in [the Asia-Pacific] region,” he said. “We’re not a member of the Trans-Pacific Partnership, we find China extremely engaged, so what is our strategy to deal with China’s influence?”

When pressed directly on whether she would seek negotiations with CPTPP members on Washington’s possible entry, Tai reiterated her stance that negotiations would require support from the trading bloc for a “worker-centred” trade policy that does not stop enriching manufacturers.

She also alluded to the need for strong bipartisan support for CPTPP negotiations, noting that domestic political opposition to the pact’s first incarnation doomed the effort.

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“There are a lot of good [trading] partners ... that are very interested in engaging with US leadership again that will be there,” said Tai, adding that she wants “to ensure that as we are taking steps ... to make sure that we are effective, and that we are pursuing a vision that is well supported, here at home, on a very strong and robust bipartisan basis”.

Perceptions of China as an economic threat have gained more momentum since the 2016 election, helping to overcome opposition to an Asian-focused trade pact, said Neysun Mahboubi, a research scholar at University of Pennsylvania’s Centre for the Study of Contemporary China.

“The utility of TPP for purposes of competing with China, economically, is overwhelmingly apparent,” said Mahboubi, who also cautioned that “there remain countervailing domestic politics” to be overcome before bipartisan support is strong enough for Washington to join.

Some labour unions, including the International Association of Machinists and Aerospace Workers (IAM), for example, opposed the United States-Mexico-Canada Agreement, Trump‘s signature trade deal.

US Senator Mike Crapo speaks as US Trade Representative Katherine Tai testifies before the Senate Finance Committee on Capitol Hill in Washington on Wednesday. Photo: Reuters

Congress passed the USMCA, a revised and more labour-friendly version of the North American Free Trade Agreement (Nafta) last year, although IAM president Robert Martinez Jnr announcing after its passage that accord did not do enough to stop the outsourcing of hundreds of thousands of jobs to Mexico.

There was less agreement among the senators on the patent waiver front in Wednesday’s hearing.

The message was mostly split between criticism from Republicans and encouragement from Democrats, with the exception of Bob Menendez from New Jersey, who chided Tai for not engaging in “appropriate congressional consultation” before making her announcement last week.

Many of the Republicans warned that such a move would undercut health care technology innovation that will be needed to fight additional infection surges as well as future pandemics.

“Why would we expect American innovators to make massive new investments in medical research, in carbon capture, in clean energy and advanced technologies, if they risk losing intellectual property during the next thing that is truly a global crisis?” said John Barrasso, a Republican senator from Wyoming.

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Other Republican used the same line of argument.

“I am aware of no evidence whatsoever, that this step is going to enhance vaccine availability in developing countries,” said Patrick Toomey, a Pennsylvania Republican.

“It could quite possibly be the contrary ... there are many safety concerns, for instance, [about] facilities around the world that just don’t have the technology to make this properly.

“Frankly, I think it undermines our ability to deal with the next crisis, including the possibility of the next iteration of this crisis,” Toomey said.

Tai pushed back against Republicans, pointing out that the pandemic remained out of control in many parts of the world, and would continue to drag economic growth in the US and globally until government action was taken to make vaccines more widely available.

She also stressed that no final decision would be made before consensus was reached within the framework of the World Trade Organization.

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