Ramstad: Shift in U.S. trade policy targets problems narrowly, moves away from big deals

Katherine Tai, the nation's top trade official, and Sen. Amy Klobuchar were in the Dairy Building at the State Fair eating ice cream and talking exports with Minnesota farm group leaders Wednesday, an unsurprising setting for two people who spend so much of their time on agricultural issues.

As U.S. trade representative, Tai has presided over deals this year that made headway for farmers with America's biggest trade partners — Canada on dairy, Mexico on fresh potatoes.

Those efforts showed that, even with countries that the U.S. has relatively open trade, there are always issues to work out.

"Farmers are doing very, very well this year," Tai said. "From the trade perspective, we want to focus on keeping those opportunities coming."

But with President Joe Biden, Tai has done something even more impactful — though it will seem confusing if you look at things along straight party lines.

Biden, Tai and other leaders of the administration based U.S. trade strategy around its effect on workers more than its effect on consumers.

"It's all about rebuilding trust in our trade policies and trying not to leave anybody behind," Tai said, as she and Klobuchar headed out of the Dairy Building to see more of the fair.

That's a major shift, though not so much with former President Donald Trump as with the three presidents before him — Bill Clinton, George W. Bush and Barack Obama.

Unlike those presidents, Biden has not pursued sweeping bilateral or multilateral deals, like the free trade agreement with Canada and Mexico, that were broadly seen as a key to the globalization of business and the economy over the past 30 years.

Tai and the trade agency instead have been taking what she calls an ad-hoc approach, attacking market restrictions almost on a country-by-country, sector-by-sector basis.

"The traditional way we've done trade was very good for our farmers but really not for a lot of our industrial producers," Tai said. "We got to the point where, when we needed to push one of those trade agreements through, we were pitting our farmers against our industrial producers. That is fundamentally not a recipe for success for an economy that you want to be strong across the board."

Over the decades, one of the prices that the U.S. paid for its pursuit of trade liberalization was a reduction in factories and manufacturing jobs. Tai called it "massive vulnerabilities."

"We're challenged by all of the conflicts that came from offshoring, the loss of jobs," Tai said.

Tai spent most of her career as a congressional staff attorney but also worked in the trade office on enforcement during the Bush and Obama administrations.

She noted that the sweeping trade deals were structured in part to make sure that farmers and farm-state legislators, like Klobuchar, supported them.

Food accounts for about 7% of America's exports, and only about 15% of the food that the country's farmers produce is exported. They get enormous attention, though, because they have big effects on the marginal performance of farm income.

But manufactured goods represent 80% of the value of the nation's exports.

"There's absolutely a fairness issue," Tai said, that the Biden administration's broader focus on manufacturing and workers is trying to correct. "There's also a resilience and strength-of-the-economy issue."

The Biden approach is seen by many veterans of earlier U.S. trade deals, as well as many in the business world, as closer to Trump's.

During his first week in office, Trump walked away from a comprehensive regional trade deal in Asia, then pursued changes to the free trade pact with Canada and Mexico. He imposed tariffs on major partners like China and the European Union, then provided subsidies to farmers and business that were hurt when those places retaliated.

Government policy can often seem riddled with contradictions. But trade is an area that is especially prone to it.

Here's why: No matter the country, people will always express support for exports — but not so much for imports, the other side of the trade equation.

Indeed, free trade negotiations are often a misnomer. The dealmakers begin discussions pledging to lower trade barriers but spend most of their time fighting to preserve some of them.

For Klobuchar, an ongoing dispute with Mexico was one of the main reasons she wanted Tai to meet Minnesota farmers. Tai's agency is trying to persuade Mexico to drop its ban of genetically modified corn that the U.S. exports in dough and tortillas.

"It's important to have her listen to our businesses and ag producers," Klobuchar said.

The U.S. two weeks ago asked for a review panel in the corn dispute with Mexico, an adjudicating process under the free trade pact. "Now, we're into the litigation," Tai said.