Katherine Tai  – meet the next US Trade Representative

The United States Trade Representative (USTR) is the key person in charge of trade issues in the President’s administration. The current USTR, Robert Lighthizer, was instrumental in crafting and implementing Trump’s trade policy. On December 9^th, several news outlets reported that President-elect Joe Biden will be nominating Katherine Tai for this role. In this blogpost we introduce her and the challenges she is facing.

What is the USTR?

The position of USTR was created by the Trade Expansion Act of 1962 and the role covers three important  functions: advice, coordination and negotiation. First, the USTR serves as chief advisor to the U.S. President on trade policy and its public communication. Second, the USTR coordinates the trade policy between different agencies of the administration and consults with members of Congress or congressional committees.

Third, the USTR acts as the chief negotiator in bilateral or regional or trade agreements as well as in the World Trade-Organizations (WTO.) The USTR is a member of the President’s cabinet; her/his nomination by the president needs to be confirmed by the US Senate.

Who is the current USTR and what is his legacy?

The current trade representative, Robert Lighthizer, has held this position since May 15, 2017. Lighthizer is a trade law veteran, who served in the Reagan administration, and holds the view that the trade policy of previous US administrations has not done enough to support American industrial workers and has ceded too much authority over US trade policy to the WTO.

As a result, he leaves behind a controversial legacy: On the bilateral and regional level, Lighthizer was a driving force behind tariffs on steel and aluminum and the trade war with China. He  led the negotiations for the Phase One Deal, as well as for the US-Mexico-Canada Agreement (USMCA), NAFTA’s successor. He also left his mark on the WTO, which he severely damaged by blocking decision processes in the organization.

By refusing to nominate new members to the Appellate Body, he crippled the second stage of the dispute resolution mechanism, seriously undermining the institution’s ability to enforce its rules. He also blocked the nomination of Nigeria’s Ngozi Okonjo-Iweala as new WTO Director General although she emerged as the candidate with the widest backing of WTO member states.

Who is Katherine Tai?

Katherine Tai currently serves as the chief trade advisor of the Ways and Means Committee of the House of Representatives. She is a lawyer by training with degrees from Yale and Harvard University. With previous work in the USTR – where she served as Chief Counsel on China Trade Enforcement during the Obama administration – she has extensive knowledge of trade policy and law. Tai’s parents immigrated from Taiwan, so she is fluent in Mandarin and also knows China well, having lived in Guangzhou for a few years .

Which domestic challenges will she face is she is confirmed?

In a recent interview, President-elect Biden vowed “to fight like hell by investing in America first” and said he would not “enter any new trade agreement with anybody until we have made major investments here at home and in our workers.” A core competency of Tai’s will therefore be to utilize trade as an international means of supporting and amplifying Biden’s “Build Back Better” policy.

This policy seeks to encourage domestic economic growth across several sectors, including in renewable energy and climate change mitigation sectors. Here, Tai has a tremendous opportunity either to maintain the growing notion that trade is important or to return it to its quieter, more traditional place in Washington and U.S. politics.

Historically, trade has not been among the top policy interests of American voters. However, President Trump’s louder approach to trade, often met with aversion by diplomats and bipartisan trade experts, elevated the importance and coverage of trade policy in the U.S. It remains to be seen if, under new leadership, trade will occupy as much space within the American consciousness.

It will also be up to Tai to help fine tune American voters’ notions of whether trade is good or bad and whether it is compatible with broader sustainability goals. However, beginning her mandate in the midst of a pandemic and global climate crisis, Tai does have an immediate opportunity to demonstrate the true value of trade to American citizens.

Which international challenges will she face if she is confirmed ?

Tai’s knowledge of China will be asset, if her nomination to the post of USTR is confirmed by the Senate. President-elect Biden has made it clear that he views China as a geostrategic threat and regards many of China’s trade policies as problematic – hence China will be the primary focus of any USTR.

To some extent, that will mean direct negotiations but it will also require developing a geoeconomic strategy for the Pacific region as a whole, which could involve a possible re-joining of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

China is not the only issue on the agenda of the new USTR. The WTO and its reform should also be a priority, given that Biden has made a return to multilateralism a core feature of his foreign policy. Whether to lift Lighthizer’s veto on Ngozi Okonjo-Iweala as new Director General or continue the blocking of the nomination will be a decision that the new USTR has to make early on.

Also  trade relations with the EU will be on the agenda: what should be done about the Boeing-Airbus dispute related tariffs? How can the US and the EU cooperate in setting international norms and rules? While a fully-fledged transatlantic trade agreement seems politically unlikely, more intense cooperation on select trade policy elements makes sense for both parties.

Finally, Biden’s administration intends to be more ambitious in terms of climate policy, another issue that also is high on the EU’s agenda and which has repercussions on trade policy. The EU is planning to introduce a carbon border adjustment tax, a policy that has been viewed with great skepticism by the Trump administration. How the Biden administration reacts to this policy or maybe even treats this as a possibility for collaboration, is another big question.

What’s next?

President-elect Biden has announced that he will detail his trade policy agenda on January 21, only one day after his inauguration. The confirmation process for Ms. Tai could start soon afterwards but will probably take several weeks. So, her first task will be to defend the new president’s approach to international trade in Congress.