‘Free trade’ likely losing grip as gospel under Biden
WASHINGTON — For decades, the principle of “free trade” inspired a kind of religious reverence among most American politicians. Lawmakers, diplomats and presidents justified their policies through the pursuit of freer trade, which, like the spread of democracy and market capitalism, was presumed to be a universal and worthy goal.
But as the Biden administration establishes itself in Washington, that longstanding gospel is no longer the prevailing view.
Political parties on both the right and left have shifted away from the conventional view that the primary goal of trade policy should be speeding flows of goods and services to lift economic growth.
Instead, more politicians have zeroed in on the downsides of past trade deals, which greatly benefited some American workers but stripped others of their jobs.
President Donald Trump embraced this rethinking on trade by threatening to scrap old deals that he said had sent jobs overseas and renegotiate new ones. His signature pacts, including with Canada, Mexico and China, ended up raising some barriers to trade rather than lowering them, including leaving hefty tariffs in place on Chinese products and more restrictions on auto imports into North America.
The Biden administration appears poised to adopt a similar approach, with top officials like Katherine Tai, the nominee to run the Office of the U.S. Trade Representative, promising to focus more on ensuring that trade deals protect the rights and interests of American workers, rather than exporters or consumers.
Tai has received broad support from former colleagues in Congress, both Democrats and Republicans and on Wednesday she was confirmed by the Senate with a vote of 98-0.
President Joe Biden and his advisers have promised to review the impact that past trade policies have had on economic and racial inequality, and put negotiating new trade deals on the back burner while they focus on improving the domestic economy. And they have not yet made any moves to scale back Trump’s hefty tariffs on foreign products, saying that they are reviewing them, but that tariffs are a legitimate trade policy tool.
In her hearing before the Senate Finance Committee on Feb. 25, Tai emphasized that she would help usher in a break with past policies that would “pit one of our segments of our workers and our economy against another.”
While Tai reassured senators that she would work with them to promote exports from their districts, she called for a policy that would focus more on how trade affects Americans as workers and wage earners.
When asked by Sen. Patrick Toomey, R-Pa., a noted free trader, whether the goal of a trade agreement between two modern, developed economies should be the elimination of tariffs and trade barriers,
Tai declined to agree, saying she would want to consider such agreements on a caseby-case basis.
“Maybe if you’d asked me this question five or 10 years ago, I would have been inclined to say yes,” Tai responded. But after the events of the past few years — including the pandemic, the Trump administration’s trade wars and a failed effort by the Obama administration to negotiate a Pacific trade deal — “I think that our trade policies need to be nuanced, and need to take into account all the lessons that we have learned, many of them very painful, from our most recent history,” she said.
Clyde Prestowitz, a U.S. negotiator in the Reagan administration, called the administration’s statements on trade “a revolution.” While Robert E. Lighthizer, Trump’s trade representative, also parted with the conventional wisdom on trade, he was seen as an exception, a former steel industry lawyer steeped in protectionism, Prestowitz said.
Like Tai and Lighthizer, many past presidents and trade officials emphasized fair trade and the idea of holding foreign countries accountable for breaking trade rules. But many also paid homage to the conventional wisdom that free trade itself was a worthy goal because it could help lift the economic fortunes of all countries and enhance global stability by linking economies.
That idea reached the height of its popularity under the presidencies of George H.W. Bush, Bill Clinton and George W.
Bush, where the United States negotiated the North American Free Trade Agreement, led the talks that gave the World Trade Organization its modern format, granted China permanent normal trading relations, and sealed a series of trade agreements with countries in Latin America, Africa and the Middle East.
It remains to be seen how much the Biden administration will adhere to the Trump administration’s more protectionist policies — like keeping the tariffs on China.