Murphy Shines Light On How U.S. Trade Policies Affect U.S. Quality of Life

November 19, 2019 by Dan McCue

WASHINGTON – It used to be that when the general public thought of big U.S. policy, it thought of things like cold and hot wars, international diplomacy and sweeping changes in civil rights legislation.

Trade, if it came to mind at all, was typically relegated to the margins.

No more. Today it’s almost impossible to turn on the television or open a paper and not see something about the impact of trade, and how it’s reverberating through our society and our economy.

Thanks to the Trump administration’s ongoing trade war with China and its efforts to ratify a new North American trade deal with Mexico and Canada, the buying and selling and movement of goods have affected every American at home and in the workplace.

Among those who believe this new awareness is an opportunity is Rep. Stephanie Murphy, D-Fla., a member of the House Ways and Means trade subcommittee.

On Tuesday, she hosted the first of a series of briefings on trade related subjects in the Rayburn House Office Building.  

“Trade matters,” Rep. Murphy said as she welcomed an esteemed panel of experts and members of the public to the inaugural session.

“It matters because it stands at the intersection of domestic and foreign policy, and something we should all be thinking deeply about because one way or another, it’s going to have an impact on our lives,” she said.

Right now, she said, the United States is deep into the most consequential — and some would say controversial — periods in trade policy in the nation’s history.

“So I think it’s really important that we get that policy right,” Murphy said.

Not surprisingly, the topic for the first session was China, and whether the Trump administration’s tactics and penchant to impose tariffs on Chinese imports will lead Beijing to make the kind of changes the U.S. wants to see.

Whether you love Trump’s approach to trade diplomacy or hate it, Murphy said, “it certainly has been extremely assertive.”

To talk about that policy and its ramifications, Murphy assembled a panel of experts with unique perspectives. They included Chad Bown, a former member of the Council of Economic Advisors who is now with the Peterson Institute for International Economics; Matthew Goodman, of the Center for Strategic & International Studies; Brian Dodge, chief operating officer for the Retail Industry Leaders Association, Josh Kallmer, executive vice president of Policy at the Information Technology Industry Council, and Ambassador Darci Vetter, who served as chief agricultural negotiator for the Office of the U.S. Trade Representative, and is now with Edelman, the global communications firm.

In framing the discussion that would follow, Murphy acknowledged that China has long engaged in unfair trade and investment practice that violate the letter and spirit of its WTO commitments.

“I’ve always believed that we need to work in a strong, smart and strategic way to compel China to change course,” she said. “At the same time, I firmly believe the Trump administration’s primary tool, which was tariffs, has done more damage to the United States than to China, and it has done little to get China to change its problematic conduct.

Goodman, who served on the National Security Council staff before joining the Center for Strategic & International Studies, said the dispute the United States currently finds itself in with China is both complex and has been brewing for a long time.

“It’s a byproduct of the change that occurred in China over the years, particularly when it comes to technology,” he said. “You can give yourself a sore neck trying to follow the back and forth, but the bottom line is China’s growth has given rise to a host of technology transfer and intellectual property issues.

“There’s been a lot of noise around what Trump has done, but I think it is important to understand that China really is the source of the problems that are at the bottom of the trade dispute,” he said.

As an example, Goodman pointed to China’s decision to restrict its competitive landscape so to benefit its home grown companies.

“This and other issues had been building and I think … some kind of response was needed,” he said. “At the very least, what Rep. Murphy described as the administration’s ‘assertive’ policies has drawn attention to these issues.”

DON’T FORGET REGULATORY BARRIERS

Vetter focused on the trade war’s impact on American agriculture.

“China’s retaliatory tariffs are having a direct affect on U.S. agriculture and that’s really no surprise,” she said. “Agriculture is almost always front and center when it comes to retaliatory actions. It’s an easy target.

“They know we’re dependent on foreign markets and they also know there is an agricultural sector in nearly every congressional district and in all 50 states,” Vetter continued. “Politically speaking, it’s very convenient to target particular product and get the attention of the people in this room.”

As a result, the American farmer currently finds himself being squeezed from both sides. Thanks to the earliest U.S. tariffs on steel and aluminum, the price they pay for new equipment, sheds and even fencing have all risen substantially.

Along with that, China retaliatory measures have shut them out of a key market of 1.6 billion people and the back-long in demand is depressing agricultural prices.

“And it’s not just tariffs, though we hear so much about them,” Vetter said. “China’s regulatory regime, which was in place long before the tariff issue, has long created barriers to our products entering their market.”

Vetter said she hopes that as negotiations with China over how to break the current trade impasse proceed, those doing the negotiating hammer out detailed protocols for how to reopen Chinese markets to dairy, corn, soybeans, poultry, and other products after an outbreak of disease of safety recall.

“That should definitely be on the agenda,” she said.

“Of course, you don’t know if protocols work until you test them,” Vetter continued. “Protocols have to be detailed and have buy in from both sides,  based on trust and the understanding that officials are going to work together and share information.

“The problem is China has not been a good actor here,” she said. “I think they have found multiple reasons to keep their market closed to us long after other regulators in other countries were comfortable with the steps we’d taken when issues have arisen.”

TARIFFS CREATE CAPTIVE CONSUMERS

Brian Dodge said when it comes to retail, he doesn’t know of any business that’s simply been able to move its supply chain and avoid the tariff issues.

“Supply chains have been in place for decades and they’re shaped by a number of dynamics — quality of the product, skill of the workforce and so on — that can’t be readily found elsewhere when a tariff is put in place,” he said.

“What that means is that large retailers and ultimately consumers are captive to the supply chains as they exist today, which means, in the current environment, products are going to cost more,” he added.

Dodge said at the end of the day tariffs are taxes, and they are taxes that are ultimately paid by consumers.

“That’s of considerable concern to us,” he said. “If all the tariffs that have been announced go into effect — and the last tranche, on consumer goods, are slated to go into effect in just three weeks, the average household will pay about $2,300 more this year for the goods they buy.”

“The economy has been rising high for quite some time now, and that’s been driven, in part, by very confident consumers who feel they have the power to spend,” he added. “If prices go up too much and that confidence disappears, the economic high we’ve been on could very well ground to a halt.”

“We as retailers believe that should operate within a rules-based trading system, and that violators of the rules should be held accountable,” Dodge said. “We fundamentally believe though, that the tariffs are not the right tool, that they ultimately have a harmful impact.”

A RETURN TO WORKING WITH ALLIES

In the face of Chinese intransigence, Goodman said the U.S. has to do five things.

First, he said, the U.S. needs to protect “its crown jewels, its critical technology,” but enhancing screening processes and export controls. “Then we need to enforce the rules, brushing China back when it violates the rules. That’s where tariffs come in.”

‘Next, and I think this is what’s missing from the Trump administration’s approach, is we need to have a proactive approach to promoting trade rules that are in our likeness,” he said. “We also need to invest in ourselves, in our own R and D capabilities and our infrastructure for education and skills development.”

“Finally,” Goodman said, “we need to start working with our allies again across a range of critical issues. None of the individual things I’ve touched on work without allied coordination.”

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