USTR releases excerpts from Tai speech to be delivered today

Trade Representative Katherine Tai’s office early today released excerpts from what it billed as “a major speech” Tai will deliver at an Open Markets Institute conference at the National Press Club.
The Open Markets Institute event is titled The Next World System: Can U.S. Trade Policy Make Us More Secure, Democratic, & Prosperous?
USTR said, “In her speech, Ambassador Tai will highlight how the U.S. trade agenda is prioritizing resilience in the global economy. Building on National Security Advisor Jake Sullivan’s recent speech on renewing American economic leadership, Ambassador Tai will detail how the pursuit of efficiency and low costs in trade policy led to vulnerable and high-risk supply chains — and how the Biden-Harris administration is reversing this trend by raising standards, driving sustainability, and prioritizing the needs of our workers and producers.
Tai’s speech and a fireside chat will be livestreamed at 1:45 p.m. ET.

Excerpts from Tai’s speech:
“Our world is different now.
“A war in Europe, with drastic economic consequences. A worsening climate crisis. A digital transformation that continues to accelerate and transform our world, creating economic opportunities, powerful industry giants, as well as threats and harms to democracy and humanity all at the same time.
“And of course, fragile supply chains and an unsustainable version of globalization demanding reform and improvements. It is abundantly clear that these challenges have implications for competition policy, as well as trade policy. So, all of us working in these spaces must row in the same direction.”
“Today, labor leaders, CEOs, foreign leaders, and the president’s national security advisor all agree: Our global supply chains, which have been created to maximize short-term efficiency and minimize costs, need to be redesigned for resilience.
“Because resilient supply chains are vital for greater national and economic security.
“By this, we mean production that can more easily and quickly adapt to and recover from crises and disruptions. It means having more options that run through different regions.
“But getting there requires a fundamental shift. A shift in the way we incentivize decisions about what, where, and how we produce goods and supply services.”
“I recently had an important conversation with UAW President Shawn Fain and AFL-CIO Secretary-Treasurer Frederick Redmond in Detroit, during the APEC Ministers Responsible for Trade Labor Dialogue. Shawn shared how the closure of the General Motors plant in his hometown in Indiana was a vivid illustration of why we must do things differently.
“When the plant shut down, people lost their jobs. They lost their healthcare. The small businesses that sustain the community closed down, and people started moving away in search of other opportunities.
“Those who lost their jobs, if they were fortunate to find new ones, often had to settle for lower wages and worse benefits.
“Their children faced an uncertain future.
“This is what a race to the bottom looks like.
“You can see how the decision to allow artificially low costs and low prices to lead U.S. economic policymaking has made us less secure, less free, and less prosperous.
“That is why President Biden’s vision for our future is to build the economy from the bottom up and the middle out, not from the top down.”
“I hear all the time that because we are not doing traditional trade agreements, we are not doing trade at all. But if we look at what those agreements did, we see the ways in which they contributed to the very problems we are now trying to address.
“The industrial supply chain rules in our traditional free trade agreements were based on that same premise of efficiency and low cost.
“Because of it, they allow significant content to come from countries that are not even parties to the agreement — free riders, who have not signed up to any of the other obligations in the agreement, such as labor and environmental standards. That means these rules benefit the very countries that have used unfair competition to become production hubs.
“That is how the supply chain rules in these FTAs tend to reinforce existing supply chains that are fragile and make us vulnerable. This does not make sense at a moment in history when we are trying to diversify and make them more resilient.”
“The people I meet on my domestic travels — civil society, labor, and businesses, too — their aspirations and challenges provide the basis of all of our new trade engagements. That is what you see in the Indo-Pacific Economic Framework discussions, where a lot of what we are trying to do is orient the rules toward working people, the environment, and small businesses.
“Having placed a traditional priority on promoting the interest of the ‘bigs’ and seeing the limitations created by the outcomes of that policy approach, we are now focusing on folding in the interests of small businesses.”
“By flipping race-to-the-bottom dynamics on their head to create a race to the top, we are working toward a world with a more diverse set of economies producing steel and aluminum, a world where democracies and open markets can flourish and drive standards that improve over time.
“As President Biden says, we truly are at an inflection point. We are facing multiple challenges at the same time, so our trade policy cannot remain in a silo.”
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