Trade Policy: From America First to Economic Patriotism

President Trump put trade policy on center stage during the 2016 election cycle, shifting the debate from free trade versus fair trade to America-first trade. While stakeholders in the trade space may hold out hope that the 2020 election will rebalance the trade debate, most of the frontrunners in the Democratic presidential primary share some of President Trump's views on trade. In each Advisory in this series, we will compare a Democratic presidential candidate's positions on trade to President Trump's trade policies to preview what trade policy changes are likely should a Democratic presidential candidate win in the November 2020 election.

Elizabeth Warren

Elizabeth Warren, a second-term U.S. Senator from Massachusetts, views trade policy as a means to advance environmental goals and protect labor rights, as opposed to a means to open new markets. Out of all the Democratic presidential candidates, Warren has released the most comprehensive trade policy so far.¹ In addition to using the United States' leverage to raise the world's standards on everything from the environment to tax enforcement,² Warren also argues U.S. trade policy should focus on helping American workers and families.³ But even a Warren Administration is likely to keep or rely on many of the policies and tools relied on by the Trump Administration.

Free Trade Agreements

While rejecting the idea that free trade agreements are good because they open up markets, Elizabeth Warren favors free trade agreements as a tool to raise international standards.⁴ As a Senator, Elizabeth Warren voted against giving then-President Obama trade promotion authority to negotiate trade deals,⁵ arguing a future president could "easily use a future trade deal to override our domestic financial rules."⁶ Warren also has "led the fight against the trade deal with Asia and the trade deal with Europe," because she did not think it was "in the interests of the American people, the American workers, or environmental interests."⁷

Calling for a "coherent trade policy," Warren has laid out her objectives for free trade agreements to focus on American workers.⁸ Her trade agenda, according to her campaign website, would prioritize investment in American workers to "ensure that American families benefit from international trade in the decades to come."⁹ In addition, a Warren Administration would use the United States' "leverage to force other countries to raise the bar on everything from labor and environmental standards to anti-corruption rules to access to medicine to tax enforcement."¹⁰ According to Warren's trade agenda, raising the "world's standards to our level" would allow American workers to compete and thrive and improve conditions for "millions of people around the world."¹¹

Unlike the Trump Administration's tariff-based trade agenda, we would expect a Warren Administration to focus on transparency. Specifically, Warren has pledged to: publicly disclose negotiating drafts of trade agreements; allow the public the opportunity to comment; use trade advisory committees to "prioritize the views of workers and consumers;" and offer more opportunities for the public and elected representatives to shape trade agreements.¹² Warren has also indicated she would seek approval from labor, consumer and rural advisory committees before committing to new trade agreements.¹³ Similar to Joe Biden, Warren would ensure trade agreements address labor and environmental concerns.¹⁴

Warren also has laid out a number of trade standards her administration would use to renegotiate existing trade agreements and as preconditions to any new trade agreements. These conditions would require countries to:

1. recognize human and core labor rights;
2. recognize and enforce religious freedom;
3. comply with the Trafficking Victims Protection Act;
4. eliminate fossil fuel subsidies and be a party to the Paris climate agreement;
5. ratify the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions;
6. participate in the OECD's Base Erosion and Profit Shifting project to combat tax evasion and avoidance; and
7. not appear on the Treasury Department's currency manipulation list.¹⁵

Since the United States does not currently meet these standards and likely would exclude developing nations, it is unclear which countries would be eligible to negotiate free trade agreements with a Warren Administration.

U.S.-Mexico-Canada Agreement (USMCA)

Warren voted for the USMCA implementing bill,¹⁶ arguing it was a "modest improvement" over the original North American Free Trade Agreement (NAFTA) and that the deal would give "some relief to our farmers."¹⁷ However, she said she would "get up the next day and fight for a better trade deal." We therefore would expect a Warren Administration to try to renegotiate the USMCA at some point, but it is unclear when an opportunity to reopen USMCA negotiations may arise.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (formerly, the Trans-Pacific Partnership (TPP)).

Although Warren fiercely opposed TPP, she has said her administration would commit to working with countries in Asia, noting "our relationships in Asia are essential for U.S. national security and prosperity."¹⁸ Warren noted she opposed TPP because she thought "it was a bad deal for American workers."¹⁹ Specifically, in a September 2016 letter to then-President Obama, Warren, joined by several Democratic senators, said passing TPP would "hasten the erosion of U.S. manufacturing and middle class jobs, and accelerate the corporate race to the bottom."²⁰ As a presidential candidate, Warren promised any new trade deals would "set[] strong standards and prioritize[] working families instead of the interests of giant multinational corporations with no particular allegiance or loyalty to America."²¹

We would expect a Warren Administration to work with our allies and other countries to use America's leverage to raise worker standards across the globe. Warren also has indicated she would work with our allies to "curtail the power of multinational monopolies."²² Additionally, she would use a multilateral agreement to "protect domestic green policies."²³

China

While Elizabeth Warren argues President Trump's trade war escalations with China are harming American consumers and farmers, it is unclear how a Warren Administration would deal with China. As a senator, Warren's record on China is limited. She voted against the nomination of Terry Branstad to be the U.S. Ambassador to China²⁴ and supported an appropriations amendment related to Treasury Department investigations on illicit synthetic opioid trade originating in China.²⁵ During a 2018 trip to China, Warren told reporters the United States policy towards China has been "misdirected," and that "[w]e told ourselves a happy-face story that never fit with the facts."²⁶ She also said China's "fail[ure] to respect basic human rights," prevents the United States from supporting a more integrated economic system with China.²⁷ However, her trade agenda only mentions China once, arguing "[w]e've let China get away with the suppression of pay and labor rights, poor environmental protections and years of currency manipulation"²⁸ only to increase revenue for big corporations.

Unlike many of the Democratic Presidential candidates, Warren did not release a statement on the phase one trade agreement. She also has been less vocal on Section 301 Chinese tariffs. For example, in November 2019, Warren was the lead signatory on a letter to USTR Robert Lighthizer urging USTR to "provide support to find other markets for this critical U.S. industry, and work creatively to help relieve the economic pressure faced by [cranberry] producers."²⁹ She also has voiced support for tariffs, arguing "tariffs are one of the tools in the toolbox."³⁰ Elaborating on the use of tariffs, Warren said "we should run trade policy—including tariffs where necessary—that works for American workers, not just multinational corporations. But it also means we must recognize that trade should serve our larger foreign policy goals, not the other way around."³¹

Similar to Biden's approach to China, we would expect a Warren Administration to rely on multilateral trade agreements to curb China's trade practices. However, while Warren has shown concern for the impact of tariffs on farmers, it is unclear whether she would roll back the Trump Administration's Section 301 tariffs.

Section 232 Tariffs

While Warren appears to support the Trump Administration's Section 232 steel tariffs, she has been critical of the administration's exclusion process.³² Specifically, Warren argued the Commerce Department's implementation of the tariff exclusion process "undermines American steel producers—by allowing large tariff-free imports of foreign steel—and harms American-owned steel-dependent companies instead of improving their competitive advantage over companies headquartered in China and other foreign countries."³³

Conclusion

While we would expect a Warren Administration to shift the goals of American trade policy, a Warren Administration is likely to continue many of the same tools relied on by the Trump Administration, though likely with increased precision and more transparent review processes. However, given the high set of standards Warren has laid out as a precondition to new trade deals, we would not expect many new free trade agreements. It is also unclear what role tariffs would play in Warren's trade agenda. Similar to a Biden Administration, we would expect a Warren Administration to work with our allies to address China's trade practices.

Elizabeth Warren's Trade Positions

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.