Trade Compliance

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Democrats’ New “Better Deal” Agenda Aims to Outflank Trump on Trade

Posted August 08, 2017

For Canadian businesses worried by President Trump’s frequently intemperate trade rhetoric, particularly his angry broadsides against various sectors of Canada’s economy and his administration’s overtly protectionist “America First” policies, the new trade platform recently announced by the Democratic Party offers little in the way of a comforting alternative.  

Part of a populist rebranding effort that harks back to the tradition of Franklin Roosevelt,  the Democrats’ “Better Deal” economic agenda aims to convince voters that the party stands for something (other than simply being anti-Trump) and understands the concerns of blue-collar workers in America’s industrial heartland.

In an op-ed for the New York Times, Senate Minority Leader Charles Schumer stated that: “Americans are clamoring for bold changes to our politics and our economy. They feel, rightfully, that both systems are rigged against them, and they made that clear in last year’s election. American families deserve a better deal so that this country works for everyone again, not just the elites and special interests.”

Regarding the new agenda’s trade component, a seven-point blueprint unveiled by lawmakers last week vows to “fundamentally transform our trade policies by giving American workers and small businesses the tools to combat those countries that try to cheat on trade and a stronger voice in negotiating trade agreements.”

The plan includes progressive viewpoints on renegotiation of the North American Free Trade Agreement and “Buy America” reform, along with calling for a new economic security investment watchdog, measures to counter currency manipulation, creating a new trade prosecutor position, penalties for contractors that outsource, and an outsourcing tax for companies that leave the United States.  More specifically, the Democrats’ trade proposals would:

  • Allow a U.S. industry to require the Commerce Department to investigate a country’s undervaluation of its currency and impose duties on those imports to offset the currency manipulation. Currently, a more cumbersome process requires the Treasury Department to declare a foreign country, such as China, a currency manipulator, and then the U.S. must bring a case before the World Trade Organization.
  • Establish an independent trade prosecutor under the auspices of the International Trade Commission who could address trade violations more quickly and effectively than the U.S. Trade Representative. The prosecutor would also have the power to order trade retaliation against countries found in violation of trade rules and have not agreed to eliminate the offending policy by restricting U.S. market access at a level proportional to the U.S. company’s loss, without authorization from the WTO.
  • Work to revise NAFTA to combat Mexico’s weak labour standards that encourage U.S. companies to locate production in that country. Additionally, the plan calls for enforceable environment rules, stronger “Buy America” provisions, additional agricultural market access, digital trade rules, and “more balanced trade between the three countries.” The Democrats also want improved transparency and public input provisions, recommending that the USTR should hold “town halls” in at least 10 states to discuss the NAFTA renegotiation as the process moves forward. 
  • Create an American Jobs Security Council composed of “independent economic experts” that would review foreign companies proposed investments for negative economic implications, such as the loss of the U.S. jobs, and have the authority to block them.
  • Penalize federal contractors that outsource functions such as customer service call centers by requiring U.S. agencies to consider that history when awarding a federal contract.
  • Strengthen the “Buy America” domestic content provisions for federal procurement by closing loopholes, requiring the use of U.S. iron and steel in all government projects, and limiting the amount of manufactured products that can be foreign-made.

Whether the platform has any chance of gaining traction in Washington or will be embraced by working class voters in next year’s mid-term elections remains to be seen, but if nothing else it represents a significant pivot away from the pro-free trade and globalization beliefs of the last two centrist Democratic presidents and a shift towards the populist, tough-talking economic nationalism and “fair trade” rhetoric that fueled Senator Bernie Sanders’ insurgent candidacy and in no small part helped Donald Trump win the presidential campaign.