Can Biden Put Workers First in Trade Talks?

Can Biden Put Workers First in Trade Talks?

2021-06-10 22:30:05

Thursday's news that consumer prices have risen more than expected over the past year fueled a smoldering debate over the threat of inflation as the economy picks up again. It also largely drowned out another trade policy announcement, which the Biden administration had hoped would send an important signal that it was breaking with the past.

Katherine Tai, the US trade representative, told the A.F.L.-C.I.O. during a speech Thursday that the White House was working to put workers first in negotiations with its trading partners, a shift from the usual focus on macroeconomics and business interests. In her speech, Tai said the previous approach had "created a confidence gap with the public over free trade".

"We want to make trading a good force that encourages a race to the top," Tai said. “The first step to achieving this goal is to create a more inclusive process. To understand how trade affects workers, we want to meet them, listen to them and learn from them.”

Our economy reporter Jeanna Smialek interviewed Tai for an article published prior to her speech. After this morning's speech, Jeanna (who was also covering inflation news) spoke to me about what the Trade Representative's announcement means – and what the administration would need to do to deliver on the commitment.

In her speech today, Ambassador Tai said the United States would prioritize workers in its relations with other countries. The Obama administration said: some similar thingsBut frankly, for a long time, the priorities of the U.S. Trade Representative have been driven, at least in part, by corporate interests — which doesn't always equate to a commitment to American workers. If the Biden administration lives up to Tai's promise, how important would this shift be?

There is a widespread perception in the economy – as Ambassador Tai noted – that policymakers and analysts have for too long viewed free trade as growing the overall pie, without paying enough attention to who got a slice. Focusing on the distributional effects of trade, and especially what it means for workers at home and abroad, is a shift that has really started in recent years. If the Biden administration can make meaningful changes here, that would be a big deal, but I think how drastic those could be practically remains a big question.

This aligns with a broader shift in economic priorities that this administration has sought to communicate to the public. That includes handing over cash payments directly to the Americans through the stimulus, and the Fed's stated emphasis on achieve full employment. To what extent does this reflect from a political point of view an attempt to directly address the concerns of working-class voters in ways that previous governments have not?

Cash payments to American workers and families began under the Trump administration and the Federal Reserve is politically independent. The central bank's increased focus on full employment is really a product of an era of relatively low inflation, which has given it more room to work on labor market outcomes.

But it's clear that the focus on workers has increased in recent administrations, both Democrat and Republican. I suspect some of that is driven by economics and hard facts: Labor's share of the nation's income has been declining for a long time, this is a democracy, and voters have taken note. When we talk about economic prosperity, to whom that prosperity belongs – everyone or just a few elites – is increasingly becoming a big part of the debate.

The Biden administration has already taken some steps in line with Tai's pledge — pushing for workers' rights in relations with Mexico and with the World Trade Organization. But as you point out in the article, it's not yet clear how the government plans to deliver on its promise on a larger scale. What are you looking for as Tai reworks the country's trade approach?

Ambassador Tai said in the speech that the government will try to use meetings in Europe next week to begin "new standards to combat the harmful industrial policies of China and other countries that undermine our competitiveness". I think it will be interesting to see what comes of that, and to see how much the government can do to push for worker protection in trading partners, such as China, where the wishes and priorities of the United States are less predominant. .


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