Biden’s Pacific Trade Pact Suffers Setback After Criticism From Congress

The Biden administration has pulled back on plans to announce the conclusion of substantial portions of a new Asian-Pacific trade pact at an international meeting in San Francisco this week, after several top Democratic lawmakers threatened to oppose the deal, people familiar with the matter said.

The White House had been aiming to announce that the United States and its trading partners had largely settled the terms of its Indo-Pacific Economic Framework for Prosperity, an agreement that aims to strengthen alliances and economic ties among the United States and its allies in East and South Asia.

But Senator Sherrod Brown, Democrat of Ohio, and other prominent lawmakers have criticized the pact, saying it lacks adequate protections for workers in the countries it covers, among other shortcomings.

The Biden administration, facing the possibility of additional critical public statements, has decided not to push to conclude the trade portion of the agreement this week, and has been briefing members of Congress and foreign trading partners in recent days on its decision, the people said.

The agreement has been a key element of the Biden administration’s strategy to counter China’s growing influence in Asia by strengthening relations with allies. The framework’s partners include Australia, Indonesia, Japan, South Korea and Singapore and together account for 40 percent of the global economy.

The Indo-Pacific Economic Framework for Prosperity has four main parts, or “pillars.” The first portion, which the administration completed in May, aims to knit together the countries’ supply chains.

The Biden administration still appears likely to announce the substantial conclusion this week of two other big portions of the agreement, one on clean energy and decarbonization and another on taxation and anticorruption. The Commerce Department negotiated those two pillars, as well as the supply chain agreement.

But the thorniest part of the framework has been the trade pillar, which is being overseen by Katherine Tai, the U.S. trade representative, and her office. The trade negotiations cover issues such as regulatory practices, procedures for importing and exporting goods, agriculture, and standards for protecting workers and the environment.

Congressional Democrats, including Senator Ron Wyden of Oregon, who leads the Senate Finance Committee, have expressed concern over the labor and environmental standards. Lawmakers of both parties have criticized the administration for not closely consulting Congress during the negotiations, while others have been dismayed by the administration’s recent clash with big tech firms over U.S. negotiating positions on digital trade.

Katherine Tai, the U.S. trade representative, second from left, has pledged to include tough labor standards in the agreement.Credit…Jason Henry/Agence France-Presse — Getty Images

In a statement last week, Mr. Brown, who is facing a tough re-election fight next year, called for cutting the entire trade pillar from the agreement, saying it did not contain strong enough protections to ensure workers aren’t exploited.

“As the administration works to finalize the Indo-Pacific Economic Framework, they should not include the trade pillar,” Mr. Brown said. “Any trade deal that does not include enforceable labor standards is unacceptable.”

Members of Congress and their staffs had communicated concerns about a lack of enforceable provisions in meetings for several months, one Senate aide said.

In a meeting with White House officials this fall, officials from the Office of the United States Trade Representative proposed waiting until next year to announce the completed trade pillar, at which point all of the agreement’s contents, including the labor provisions, would be settled, according to a person familiar with the deliberations, who was not authorized to speak publicly.

But White House officials were eager to have developments for President Biden to announce during the meetings in San Francisco. U.S. trade officials pushed their partners in foreign countries in recent weeks to complete a package of agreements that did not include the labor provisions, intending to finish them in 2024.

After Mr. Brown’s public objections, the White House and the National Security Council asked to pull back on the announcement, the person who is familiar with the deliberations said.

A spokesman for the National Security Council said in a statement that the Biden administration had focused on promoting workers’ rights and raising standards throughout the negotiations, and that the parties were on track to achieve meaningful progress.

A spokesperson for Ms. Tai’s office said it had held 70 consultations with Congress while developing and negotiating the Indo-Pacific framework and would continue to work with Congress to negotiate a high-standard agreement.

The decision to push back final trade measures until next year at the earliest is a setback for the Biden administration’s strategic plans for Asia. It’s also a demonstration of the tricky politics of trade, particularly for Democrats, who have frequently criticized trade agreements for failing to protect workers and the environment.

Ms. Tai worked with Mr. Wyden, Mr. Brown and others during the Trump administration, when she was the chief trade counsel for the House Committee on Ways and Means, to insert tougher protections for workers and the environment into the renegotiated North American Free Trade Agreement.

Ms. Tai has pledged to include tough labor standards in the Indo-Pacific agreement, which covers some countries — such as Malaysia and Vietnam — that labor groups say have low standards for protecting workers and unions. But critics say the power of the United States to demand concessions from other countries is limited because the deal does not involve lowering any tariff rates to give trading partners more access.

While doing so would promote trade, the Biden administration and other trade skeptics argue that lower barriers could hurt American workers by encouraging companies to move jobs overseas. A previous Pacific trade pact that proposed cutting tariffs, the Trans-Pacific Partnership negotiated by the Obama administration, fizzled after losing support from both Republicans and Democrats.

In a statement, Mr. Wyden said senators had warned Ms. Tai’s office for months “that the United States cannot enter into a trade agreement without leveling the playing field for American workers, tackling pressing environmental challenges and bulldozing trade barriers for small businesses and creators.”

“It should not have taken this long for the administration to listen to our warnings,” Mr. Wyden said. “Ambassador Tai must come home and work with Congress to find an agreement that will support American jobs and garner congressional support.”

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