Monday, July 22, 2024

Harris pick would signal trade continuity for Dems

Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy.
Jul 22, 2024 View in browser
 
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By Ari Hawkins and Gavin Bade

With help from Doug Palmer

QUICK FIX

— President Joe Biden dropped out and endorsed Vice President Kamala Harris on Sunday. If she were to win the presidency, it would likely mean continuity for the U.S. trade and international economic agenda.

— Progressives are calling on the White House to use the U.S.-led Americas Partnership for Economic Prosperity to address corporate influence in existing trade and investment deals with countries in the Western Hemisphere.

— World Trade Organization members linked China’s lack of transparency in industry funding to Beijing’s overcapacity in certain sectors.

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Driving the day

Kamala Harris pointing to the right in front of a giant U.S. flag.

A Kamala Harris presidency would likely mean continuity for the U.S. trade and international economic agenda. | Chris duMond/Getty Images

A WOMAN FIRST, FIRST WOMAN: As vice president, Kamala Harris has largely embraced President Joe Biden’s international economic policies, which have eschewed traditional trade negotiations while emphasizing government-led investments in the developing world.

And, if she were to officially secure the Democratic nomination and win in November, experts largely expect the former California senator and attorney general to continue Biden’s agenda — despite some pro-trade rhetoric years ago.

Wiggle room on tariffs? Harris, observers point out, declared in 2019, “I’m not a protectionist Democrat.” And she’s repeatedly slammed Trump’s China tariffs, most recently at a North Carolina campaign stop where she assailed his 10 percent across-the-board tariff plan, saying it would raise costs for American families.

“Theoretically, there’s some wiggle room there” to divert from Biden’s own tariff policies, which have preserved Trump’s duties on consumer goods and raised tariffs on clean energy tech, said Anna Ashton, a China analyst and founder of Ashton Analytics.

But, when the rubber hits the road, Harris has shown herself to be at least as trade-skeptical as her outgoing boss. Case in point: opposing the U.S.-Mexico-Canada Agreement when she was in the Senate.

Biden, before he was elected president, decided to support the USMCA after Democrats got enhanced labor and environmental provisions inserted into the pact. But that still wasn’t enough for Harris, who wanted to see the deal cover climate change and eventually became one of only 10 senators to oppose the pact.

That could indicate that any new trade negotiations under a Harris administration will have to encompass an even wider swath of environmental issues than the USMCA, which was seen as a path-breaking deal in its own right, currently does.

And outside of full-on trade negotiations, her climate focus could also inject new momentum into initiatives that sought to limit greenhouse gas emissions from specific sectors — like the green steel deal that Biden had been trying to strike with the European Union, before those talks ran aground last year.

“I can tell you that in a Harris administration, there would be no trade deal that would be signed unless it protected American workers and it protected our environment,” she said in 2019 as she ran for the Democratic nomination.

Sharing staff: Observers see further continuity in how Harris would approach trade and diplomacy with China, largely through cross-pollination in staff members.

Mike Pyle, Biden’s former international economics chief on the National Security Council, was Harris’s chief economic adviser before he joined the White House. At the NSC, he was one of the primary architects of Biden’s shift from trade to international investment.

And Mira Rapp-Hooper, the East Asia director on Biden’s National Security Council, was an early adviser to Harris in 2020 and wrote a book on reforming the international order with Rebecca Lissner, Harris’s current deputy national security adviser.

Hope for the WTO? Some trade watchers see a potential benefit for the moribund World Trade Organization in Harris’ candidacy.

The vice president had a positive meeting in 2021 with WTO Director Ngozi Okonjo-Iweala, in which they discussed leveraging trade to improve living standards. Ashton, the China analyst, said although that meeting was early in Harris’ tenure, there’s some hope that her background as a prosecutor would mean that “she’s generally pretty big on upholding the international rules-based order and international law, so maybe she would see value in getting the WTO appellate body back up and running.”

What are her stances? The vice president’s biggest challenge may be defining her policies. And many industrial workers, who will be key to her chances across the Midwest, have already expressed dismay with the economy — even if they’ve been beneficiaries of the Biden-Harris industrial policy push.

Read more on the economic conundrum Harris inherits from Biden in our dispatch last week from Milwaukee.

Around the World

APEP ADD-ON WANTED: Democratic lawmakers are piling pressure on the Biden administration to leverage negotiations on the Americas Partnership for Economic Prosperity to address corporate influence.

They’re asking the White House to remove investor-state dispute settlement (ISDS) provisions in economic deals with countries in Latin America. And it comes in response to the Office of the U.S. Trade Representative’s public comment request on how to develop the trade track for the U.S.-led APEP program. (Comments are due today.)

The APEP trade track “represents an important opportunity to engage with U.S. trade partners to terminate the ISDS liability from some of our existing trade and investment agreements,” wrote 46 House Democrats in a letter led by Reps. Lloyd Doggett (D-Texas), Rosa DeLauro (D-Conn.) and Linda Sánchez (D-Calif.).

“Corporations have used ISDS claims, or the threat of them, to hold governments ransom for egregious amounts of money unless they roll back domestic policies aimed at protecting consumers, the environment, Indigenous communities, and more,” according to the letter they sent to USTR Katherine Tai over the weekend, first obtained by Morning Trade.

WHAT HAPPENED TO AGOA? Nine months after Biden promised to work “expeditiously” with Congress to win renewal of the African Growth and Opportunity Act, the timeline for reauthorizing the nearly 25-year-old trade preference program has slipped into an increasingly uncertain future.

Doug has more here in a story out today (for Pros!).

REGULATORY REVIEW

SPOTLIGHTING CHINA’S ‘GUIDANCE’ FUNDS: Estimates of Chinese government support for key industries provided by more than 2,100 “Government Guidance Funds” range from CNY 1.89 trillion ($260 billion) to CNY 6.51 trillion ($900 billion), according to the WTO’s latest review of China’s trade policies.

That includes 37 national funds (also known as Government Investment Funds) and an estimated 2,100 sub-national funds that support industries in a variety of sectors, including information technology, health care, artificial intelligence, new energy vehicles, advanced manufacturing and many others, the report said.

“The incentives provided by these funds have generally not been notified to the WTO,” the report noted, while adding that Chinese “authorities state that these funds operate under market principles.”

The lack of transparency surrounding Chinese government support for its industries “may also contribute to debates on what is perceived by some as overcapacity in certain sectors,” the report added, alluding to concerns raised by the United States and other WTO members.  

SPECIAL EVENTS

Emily McGlone, a former sanctions investigator and compliance officer with the Department of Treasury, joined JPMorgan Chase as vice president sanctions lead, per an announcement. McGlone briefly worked as a foreign affairs officer with the State Department.

 

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TRADE OVERNIGHT

— Five things to know about where Dems go from here, per POLITICO.

— Trump says Xi wrote him ‘beautiful note’ following shooting, per POLITICO.

— Biden drops out: European leaders react, per POLITICO Europe.

— Long-awaited Chinese policy update presents no major shift, Reuters reports.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and ahawkins@politico.com. Follow us @POLITICOPro and @Morning_Trade.

 

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Ari Hawkins @_AriHawkins

Doug Palmer @tradereporter

Gavin Bade @GavinBade

Adam Behsudi @ABehsudi

Emily Cadei @emilycadei

 

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