The news Thursday that consumer prices have risen more than expected over the past year has fueled a smoldering debate over the threat of inflation as the economy recovers. It also usually drowns out another announcement on trade policy, one that the Biden administration hoped would send a big signal that it was breaking out of the past.
Katherine Tai, the U.S. trade representative, said during a speech to the AFL-CIO on Thursday that the White House was putting workers first in its negotiations with its trading partners, a shift from the usual focus on macroeconomics and business interests. In her speech, Tai said the previous approach “created a trust gap with the public over free trade.” ‘
“We want to make the trade a good force that encourages a race to the top,” Tai said. ‘The first step in achieving this goal is to create a more inclusive process. To understand how trade affects employees, we want to meet with them, listen to them and learn from them. ‘
Our economic reporter Jeanna Smialek interrogated Tai for an article published before her speech. After the speech this morning, Jeanna (who was also discussing the inflation news) spoke to me about what the announcement of the trade representative means – and what the government would have to do to satisfy the commitment.
In her speech today, Ambassador Tai said that the United States will make workers a priority in their dealings with other countries. The Obama administration said some similar things, but honestly, the priorities of the U.S. Trade Representative have long been driven in part by corporate interests – which are not always a commitment to U.S. workers. If the Biden administration keeps the promise of Tai, how important would this move be?
Ambassador Tai has a widespread perception in the economy that policymakers and analysts have for too long looked at free trade as something that grows the overall culture, without paying sufficient attention to who gets a spot. The focus on the proliferation impacts of trade, and especially on what it means for workers abroad, is a shift that has really begun in recent years. If the Biden administration can make meaningful changes here, it will be a big deal, but I think how happy it can be a big question in practice.
This is in line with a broader shift in economic priorities that this government wanted to communicate to the public. This includes cash payments handed over directly to Americans through the stimulus, and the Fed’s pronounced emphasis on it achieve full work. How much does this, from a political point of view, reflect an attempt to speak directly to the concerns of working class voters, in ways that previous governments have not yet done?
Cash payments to U.S. workers and families began under the Trump administration, and the Federal Reserve is politically independent. The central bank’s increased focus on full employment was a product of a relatively low inflation era, which gave it more room to work on labor market results.
But it is clear that the focus on workers has increased in recent administrations, both Democrats and Republicans. I suspect that some of it is driven by economics and cold facts: the share of labor in the country’s income has been declining for a long time now, it’s a democracy, and the voters are taking note. When we talk about economic prosperity, to whom prosperity belongs – all or just a single elite – it becomes increasingly a big part of the debate.
The Biden government has already taken some steps in line with Tai’s promise – and insisted on workers’ rights in cooperation with Mexico and with the World Trade Organization. But as you mention in the article, it is not yet clear how the government intends to fulfill its promise on a larger scale. As Tai revises the country’s approach to trade, what will you look for?
Ambassador Tai mentioned in the speech that the government wants to use meetings in Europe next week to start with ‘new standards to combat the harmful industrial policies of China and other countries that’ undermine our ability to compete ‘. I think it will be interesting to see what comes out of it, and to see how much the government can do to insist on protecting workers in trading partners, like China, where the United States’ desires and priorities are less important.
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