Elizabeth Warren's campaign team has just posted a document entitled "It's Time for a New Approach to Trade." My initial reaction is that it's difficult to see how there would be much, if any, trade liberalization in a Warren administration; however, there would be some experimentation with new forms of protectionism.
Early on she sets out this general principle: "America enters into trade negotiations with enormous leverage because America is the world’s most attractive market. As President, I won’t hand America’s leverage to big corporations to use for their own narrow purposes — I’ll use it to create and defend good American jobs, raise wages and farm income, combat climate change, lower drug prices, and raise living standards worldwide."
The reality, of course, is that tariffs and other forms of protectionism are something demanded by big corporations, and unless you support liberalization, you are handing leverage to at least a few "big corporations to use for their own narrow purposes." But that's just the political rhetoric that led off the piece. Let's focus on the substance.
First, she has a new plan for the process of negotiating trade agreements: "In a Warren Administration, we will negotiate and approve trade agreements through a transparent process that offers the public a genuine chance to shape it." Here are some key elements:
- "Trade negotiators will publicly disclose negotiating drafts and provide the public with an opportunity to comment."
- "Trade advisory committees will prioritize the views of workers and consumers."
- "The US International Trade Commission will provide a regional analysis of the economic effects of a trade agreement."
- "The congressional approval process will offer more opportunities for the public and elected representatives to shape trade agreements."
The current trade negotiating process is cumbersome and challenging. Adding these additional elements may make it impossible to get a trade deal done (which is, perhaps, the objective).
Now on to the substance. She says this: "With certain important exceptions, we live in a low-tariff world. Modern trade agreements are less about the mutual reduction of tariffs and more about establishing regulatory standards for everything from worker rights to pollution to patent protections."
Those exceptions are very important, and reading through the WTO's World Tariff Profiles is enlightening.
But she's right about the regulatory standards. So what's her plan here? This:
I am establishing a set of standards countries must meet as a precondition for any trade agreement with America. And I will renegotiate any agreements we have to ensure that our existing trade partners meet those standards as well.
My preconditions are that a country must:
- Recognize and enforce the core labor rights of the International Labour Organization, like collective bargaining and the elimination of child labor.
- Uphold internationally recognized human rights, as reported in the Department of State’s Country Reports on Human Rights, including the rights of indigenous people, migrant workers, and other vulnerable groups.
- Recognize and enforce religious freedom as reported in the State Department’s Country Reports.
- Comply with minimum standards of the Trafficking Victims Protection Act.
- Be a party to the Paris Climate agreement and have a national plan that has been independently verified to put the country on track to reduce its emissions consistent with the long-term emissions goals in that agreement.
- Eliminate all domestic fossil fuel subsidies.
- Ratify the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
- Comply with any tax treaty they have with the United States and participate in the OECD’s Base Erosion and Profit Shifting project to combat tax evasion and avoidance.
- Not appear on the Department of Treasury monitoring list of countries that merit attention for their currency practices.
Yikes! That rules out a lot of countries. (Including the United States, of course, although she expects that her administration will meet all these standards).
Beyond that, she also makes clear that she will be keeping a bunch of U.S. trade restrictions:
I will ensure trade agreements protect Buy American and other programs designed to develop local industry, contain strong rule-of-origin standards to promote domestic manufacturing, ...
And she may be trying to push to allow more protectionism in green energy as well:
I will push to secure a multilateral agreement to protect domestic green policies like subsidies for green products and preferential treatment for environmentally sustainable energy production from WTO challenges.
If she means subsidies to consumers of green products that's fine, but if she is talking about allowing producer subsidies tied to local content requirements, that is both protectionist and anti-green.
And protectionist COOL measures might make a reappearance:
I will impose Country-of-Origin Labeling rules to protect American producers and provide transparency to consumers.
Country of origin labeling is fine if it is used to provide consumers with information, but in the past it was used for protectionist purposes, and when says she will impose it "to protect American producers" it sounds like we are going in that direction again.
And here's some more protectionism:
Under WTO rules, a country designated as a “non-market economy” can face more serious trade penalties. I will push for a new “non-sustainable economy” designation that would allow us to impose tougher penalties on countries with systematically poor labor and environmental practices.
I'm not sure exactly how this is going to work, but I'm pretty sure it's going to abused for protectionist purposes, because this kind of thing always is.
And one more:
Unlike the current approach that lets our government ignore unfair trade practices, my administration will create automatic triggers to initiate investigations into unfair trade practices.
She also wants to get rid of ISDS and scale back IP protections, which I have no problem with abandoning, but others might. And there is actually one proposal that sounds like it could act as a constraint on trade remedy abuse:
... when we impose duties to support particular domestic industries, I want to ensure that the money we collect actually goes to American workers, instead of being sucked up by executives and shareholders. I will fight to change our trade laws so that we review duties every six months and lift the duties if companies can’t demonstrate the benefits of the duties are going to their workers.
That seems like it could be difficult to demonstrate, so maybe trade remedies will be a little harder to maintain.
Overall, my sense is that this proposal means there would probably not be any trade deals in a Warren administration, while there would be various proposals to add new protectionism to U.S. domestic trade policy.
