Congress prepares to scrutinize Biden's trade agenda

Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy.

Mar 28, 2022 View in browser   By Steven Overly With help from Doug Palmer QUICK FIX — U.S. Trade Representative Katherine Tai will be called before a pair of Congressional panels this week, where she's expected to face questions about the administration's trade posture toward China and Russia. — The Biden administration is slated to unveil its budget proposal today. We are on alert for line items related to trade, though a major boost in funding for key agencies is not anticipated. — Leaders from across Southeast Asia won't be flocking to the White House this week as previously announced. The planned special summit will happen at a date yet to be determined. It's Monday, March 28. Welcome to Weekly Trade. Dearest Gentle Reader, your devoted scribbler most-fervently consumed the second season of "Bridgerton" this weekend to great amusement. Do share word of your own scintillating trade gossip. Much like Lady Whistledown, we endeavor to keep the trade ton achatter. Send us your news: soverly@politico.com, gbade@politico.com and dpalmer@politico.com.   SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving The Day CONGRESS TO PRESS TAI ON TRADE PRIORITIES: U.S. Trade Representative Katherine Tai is set to appear before her former bosses on Capitol Hill this week to outline President Joe Biden's trade priorities for the House Ways and Means and Senate Finance committees. Tai was approved for her post last year with a 98-0 vote, and she has enjoyed a favorable reputation among Democrats and Republicans alike. Her last testimony came just months into her tenure as the nation's top trade ambassador, a fact many lawmakers took into consideration when pressing her for specifics on the administration's agenda. But now, Tai is a year into the job and some lawmakers are increasingly concerned that President Joe Biden's trade policy lacks the ambition needed to counter rivals like China on the international stage. Members of both parties have also urged Biden to get back to the negotiating table on trade deals. China in focus : The status of trade relations with Beijing is bound to be a key focus for lawmakers as no U.S. trade relationship is as significant or as fraught. Tai initiated talks with her Chinese counterpart, Vice Premier Liu He, in October, and since then there has been little word from USTR on whether progress has been made. Meanwhile, some lawmakers have made clear they're eager to see more action in the face of China's own assertive policies. Beijing has stated its intentions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade pact that was negotiated by the U.S. but abandoned under former President Donald Trump. Biden has said he will not join the agreement in its current form. Meanwhile, China has fallen short on its commitment to purchase more American-made goods under the Phase One trade deal, and it continues to shell out industrial subsidies that critics say give its homegrown companies an unfair advantage in the global marketplace. Talk of new tools: Tai has argued her agency's existing trade tools are outdated and have failed to halt the state-driven economic policies that have powered China's global ascent. But she has declined to explain what new weapons might help the U.S. to win its next trade war with Beijing. Perhaps the hearings will yield some answers. Russian sanctions: Tai may also be called on to defend the administration's approach to economic sanctions against Russia due to its bloody conflict in Ukraine, and to offer ideas on what more can be done to stymie its exports and hamper its participation at the World Trade Organization. The Biden administration has both blocked imports of Russian energy products and suspended its permanent normal trade relations, among other measures, though those actions only came after considerable pressure from both Democrats and Republicans on Capitol Hill. BUDGET WATCH: We're awaiting the release of Biden's budget request today, which will lay out his funding wishes for fiscal year 2023. That is now just six months away. But international trade has not been a top priority under this administration to date, and trade-related agencies have not seen a major influx of funding. For instance, the Commerce Department's International Trade Administration and Bureau of Industry and Security received modest increases under the fiscal 2022 spending package the president signed into law two weeks ago. The Office of the U.S. Trade Representative budget has largely been kept flat. NEW DATE NEEDED FOR SOUTHEAST ASIA SUMMIT: President Joe Biden will meet Tuesday with the prime minister of Singapore, Lee Hsien Loong, but his plans to meet with a larger coalition of Southeast Asian leaders has been put on hold. The White House's "special summit" with the heads of the 10 members of the Association of Southeast Asian Nations will not take place Monday and Tuesday as originally announced, a change attributed to schedule conflicts with the leaders of multiple countries. "To ensure invited ASEAN leaders can all participate, we are working closely with ASEAN partners to identify appropriate dates for this meeting," a spokesperson for the National Security Council said in a statement to POLITICO on Friday. The meeting matters because Biden is trying to forge deeper inroads in the region, which is a critical hub for trade and investment. He participated in a virtual summit with ASEAN countries in late October, and announced plans to pursue an Indo-Pacific Economic Framework. The details of that arrangement so far are leaving some American lawmakers and foreign trading partners disappointed. It is not a traditional trade agreement that will include provisions to reduce tariffs or expand market access. Instead, it will address issues such as supply chains, infrastructure and clean energy. "I met with all of the ASEAN ambassadors last week, and they all say, 'This is nice, but … if you want to have a real presence here, then we are looking for a more robust, aspirational effort,'" Sen. Bob Menendez (D-N.J.) said at a Senate Finance Committee hearing earlier this month.   DON'T MISS POLITICO'S INAUGURAL HEALTH CARE SUMMIT ON 3/31: Join POLITICO for a discussion with health care providers, policymakers, federal regulators, patient representatives, and industry leaders to better understand the latest policy and industry solutions in place as we enter year three of the pandemic. Panelists will discuss the latest proposals to overcome long-standing health care challenges in the U.S., such as expanding access to care, affordability, and prescription drug prices. REGISTER HERE.     USTR EYES ACTION AGAINST MEXICO'S ENERGY SECTOR: Tai has "serious concerns" with the way that Mexico is exerting greater control over its energy sector. The question now is whether she's building a case to bring a formal complaint under the U.S.-Mexico-Canada Agreement. That would certainly appear to be the case. Tai met virtually on Friday with key lawmakers and environmental advocates to gather their grievances with Mexico's policies. At that meeting, Tai noted her office was scrutinizing changes to energy regulations and government efforts to limit competition, per a readout of the meeting. TURKEY, EU TURN TO ALTERNATIVE WTO APPEALS OPTION: With the WTO Appellate Body still out of business, Turkey and the European Union notified WTO members on Friday that they have agreed on an alternative appeals procedure in two disputes: one regarding measures Turkey has imposed on the production, importation and marketing of pharmaceutical products; the other regarding safeguard measures imposed by the EU on steel imports. The development marks the first time WTO members have moved forward with an appeal since the United States effectively shut down the Appellate Body in late 2019 by blocking the appointment of new judges. However, Turkey and the EU are not using the "multi-party interim appeal arbitration arrangement" established by a number of members in 2020. That's because Turkey is not a member of the MPIA. That said, the procedures that Turkey and the EU have agreed to follow are very similar to the MPIA procedures, with some minor procedural differences, a Geneva-based trade official noted. And like the MPIA, the procedures are also based on Article 25 arbitration rules of the WTO. There are a number of cases where WTO members have agreed in advance to use the MPIA, which have not yet reached the appeals stage. International Overnight — The U.S. will help to boost Europe's gas imports to reduce dependence on Russia, POLITICO Europe's America Hernandez reports. — Tai says the U.S. must step up the pressure on China to reform its trade practices. "We can't afford to keep sitting on our hands and waiting for China to make its decision," she told Reuters. — Higher prices for food, fuel and other items could push global economies into recession, Bloomberg writes. — The mayor of Los Angeles is not concerned that labor negotiations with port workers will add to supply chain disruption, per Bloomberg. — The cost of renewable-energy projects is increasing due to the ongoing conflict in Ukraine, The Wall Street Journal reports. — Workers at a General Motors plant in Mexico voted to keep their existing union representation, Reuters writes. 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 soverly@politico.com. Follow us @POLITICOPro and @Morning_Trade.   Follow us on Twitter John Yearwood @john_yearwood Doug Palmer @tradereporter Gavin Bade @GavinBade Steven Overly @StevenOverly   Follow us

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