Chamber Of Commerce Frustrated With Tariffs But Sees Trade Progress – Forbes

Containerized cargo is stacked high on a China Shipping Line freighter at Miami Beach, Florida. ... [+] (PAUL J. RICHARDS/AFP via Getty Images)

So far, the Biden administrations trade policy has not been much different than the America First trade policy championed by Donald Trump. That may surprise some observers, given that economists viewed the Trump trade policy as imposing significant costs on consumers and businesses while unsuccessful in achieving its aims. To better understand the views of the business community on the Biden administrations approach to trade, I interviewed John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce.

Stuart Anderson: The Biden administration has launched a comprehensive review of U.S. trade policy and set the goal of making it worker-centric. Whats your impression of this approach to date?

John Murphy: Its early, but theres both progress and frustration for the business community. The administration has pledged to restore regular order to trade policy by working more closely with Congress and the private sector, and theres good dialogue today. U.S. Trade Representative Tai deserves kudos for ending the long-running U.S.-EU trade dispute over aircraft subsidies and rejecting unwarranted tariffs on imports from Vietnam.

As for that worker-centric approach, its evident in the outreach to organized labor. This has led the administration to focus on issues such as union organizing rights in Mexico, for example. From our perspective, though, the U.S. needs to get back on offense on trade: Other countries are charging ahead with their own trade negotiations while the U.S. has not entered into a major new market-opening trade agreement in a decade. Forty million American jobs depend on trade: A worker-centric trade policy should open markets for their exports.

Anderson: Does business support this trade policy review?

Murphy: Yes, but as a country we need to expedite it, and we shouldnt get bogged down on questions that are pretty straightforward. Theres no reason the U.S. shouldnt move ahead with the trade negotiations with the UK and Kenya, for example. Declaring we have to address domestic economic priorities first isnt an answer: Trade is one of the best tools to strengthen our domestic economy.

Anderson: What about the tariffs Biden inherited from Trump?

Murphy: The business communitys frustration with the tariffs is growing. Theyre costly, they cover hundreds of billions of dollars of imports, and theyre still there. American families and companies are paying these taxes, as they have from the beginning.

Take the steel tariffs: Steel prices have soared by more than 300% in the past year, and six million American workers are employed by manufacturers that use steel as a critical input. Turning the U.S. into an island of expensive steel puts Americas most innovative and fastest growing manufacturers at a disadvantage relative to their global competitors. And steel imported from allies in Europe, Japan or Korea presents no threat to U.S. national security, which is the focus of the Section 232 statute. Tariff relief is an urgent priority.

Anderson: Were there costs to the Trump administrations trade policy?

Murphy: The Trump administration made tangible progress in select areas like digital trade, as we saw in a U.S.-Japan agreement and USMCA (United States-Mexico-Canada Agreement). The structural reform commitments in the U.S.-China trade deal represent tangible progress. But the repeated threats to withdraw from trade agreements and the imposition of tariffs on hundreds of billions of dollars of imports imposed real costs. By 2019, the drag on investment was visible, FDI (foreign direct investment) declined and U.S. manufacturing fell into a recession; for agriculture, it would have been a depression absent government support. The reason folks dont talk about it more today is the coronavirus pandemic hit and produced an even bigger disruption. We should learn from this record.

Anderson: What are the Chambers priorities on trade policy in 2021 and 2022?

Murphy: In addition to rebooting a market-opening trade agenda and untangling the tariffs, we want to establish the foundation of a trade policy that supports growth in tomorrows industries to ensure continued innovation, growth and job creation here at home.

For example, the idea of negotiating a digital trade agreement with partners in the Asia-Pacific and elsewhere presents real opportunity. New digital trade tools are allowing huge numbers of small businesses to tap foreign markets. Services trade is now growing twice as fast as merchandise trade, thanks to digital tools. But protectionist barriers to digital trade are also spreading, so an agreement to keep the digital trade lanes open is important.

Its equally important to avoid self-inflicted wounds. The pursuit of an intellectual property waiver for Covid-19 vaccines at the WTO (World Trade Organization) not only wont help increase vaccine productionwhich is growing rapidly by any accountbut threatens to divert limited supplies of critical inputs away from the facilities best prepared to manufacture these complex medicines. Creating industry partnerships is the path forward, not breaking patents.

Anderson: What role would you like to see Congress play in trade policy?

Murphy: The Constitution gives Congress the exclusive authority to regulate foreign trade and levy tariffs, and too much of this authority has been delegated to the executive. We strongly support legislation to ensure that Congress always has a say in the imposition of tariffs. And further down the road, we hope to see Trade Promotion Authority restored to ensure that Congress sets the priorities for trade negotiations and is consulted in trade talks.

Anderson: What would be the Chamber of Commerces ideal trade policy for the United States?

Murphy: A trade policy utopia . . . doesnt utopia mean a place that doesnt exist? But as an organization that represents businesses of every size, sector and state, we are leery of proposals that would impose costs on the many to advantage the fewand usually a well-connected few at that. This is too common in trade policy, across history and around the world. Historically, America has gotten this right much of the time, more than many other countries, and Im optimistic we can do so in the future.

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Chamber Of Commerce Frustrated With Tariffs But Sees Trade Progress - Forbes