Sanitary Design Connections - Spring 2021

By any objective reckoning, 3-A SSI has successfully navigated the treacherous shoals of U.S. trade policy during the four years of the Trump administration. For 3-A SSI, as with much of U.S. industry, the focus of trade policy was on the trade practices of China. 3-A SSI scored significant wins with the registration of its certification marks in China, and its successful petition before the U.S. International Trade Commission resulting in an exclusion order for imports from China that were falsely advertised as being sold by a 3-A Symbol licensee when in fact they were not. Chinese counterfeits now face an exclusion order, which will protect the health and safety of U.S. consumers.

What does 3-A SSI have to look forward to with the new Biden Administration in the area of trade policy? Trump portrayed trade as an unmitigated negative that helped China take advantage of the United States, rather than as a source of many good export-oriented jobs, more choices accompanied by lower costs for the American consumer, and lower rates of inflation at home. With the Biden administration the tone and modalities of policy will be different. There will be a shift towards industrial policy relying on tax incentives, subsidies, and government purchases, rather than the tariffs liberally imposed by President Trump, who described himself as a “Tariff Man.” Look for the Biden Administration to seek to revive domestic factories with a $400 billion “Buy American” initiative, and to promote $300 billion for clean energy research.

The Biden Administration will probably take a more multilateral approach, making greater use of the rules-based system of the World Trade Organization (WTO). An early test will be whether the United States will nominate enough judges to the appellate body of the WTO to allow it to make dispute settlement decisions.

The Biden Administration can also be expected to negotiate a free trade agreement with the United Kingdom following its messy exit from the European Union. Negotiations will continue on trade agreements with Japan, India, and Kenya. The template for any new trade agreement is likely to be the new trade agreement between the United States, Mexico, and Canada, formerly the North American Free Trade Agreement, which contains provisions requiring more U.S. domestic production.

Self-sufficiency will be the order of the day in sectors that are viewed as strategic, such as high- tech, pharmaceuticals, and health care.
It is unlikely that the United States will seek to join the 12-nation Trans Pacific Partnership (TPP), at least in the short term, a multilateral agreement that the Trump Administration vetoed on its first day in power.

Look for any new trade agreements to contain provisions designed to assure that U.S. carbon- mitigation strategies do not place U.S. industries at a competitive disadvantage against imports from countries with relatively lax levels environmental rules and practices. It is possible that the Biden
administration could consider imposing an import charge on goods whose carbon footprint substantially exceeds that of comparable U.S. made-goods.

With regard to China, it is unlikely that President Biden will immediately withdraw the tariffs resulting from the “phase one” agreement with China reached in January 2020. For each duty reduction that does take place it is likely that the United States will seek a corresponding concession from China. Interestingly, a tough trade policy with regard to China was one of the few areas of agreement between Trump and Biden. For example, on the campaign trail, Biden called President Xi Jinping a thug. The differences between Trump and Biden were related to tactics, rather than the overall objective of containing China. The Biden Administration can be expected to seek to contain China through the use of allies, rather than the unilateral actions of the “America First” go-it-alone trade policy of the Trump Administration.

Will the United States decouple from China? It is likely that there will be a strategic decoupling, focused on areas of high technology, rather than an overall decoupling. Global supply chains relying on China are simply too intertwined to permit an overall decoupling.
In an overall sense, trade will take a back seat to more pressing concerns, such as containing the coronavirus pandemic, reviving the U.S. economy and completion of needed infrastructure projects.

It is the supreme irony, and unfairness, that the coronavirus pandemic, which spread globally largely due to China’s negligence, left China as the only major industrialized economy with a positive growth posture in 2020, with a 2.3 percent growth in its Gross Domestic Product, and an anticipated 8.24 percent in 2021, compared to the devastating losses suffered by the other industrialized countries struck by the pandemic.

The halcyon days of the Washington Consensus, which relied on the benefits of the global free trade agenda, have now passed. Free trade will no longer be relied upon to lift all the boats. Economic nationalism is now the flavor of the month. That is the legacy of the Trump Administration in trade policy. The challenge for the Biden Administration will to not be left outside of the global trade arena, as new trade deals are cut between the European Union, Japan, Australia, and China. The challenge for 3-A SSI will be to assure that its trademarks and intellectual property continue to be protected as part of the new trade policy of the Biden administration.

Bart S. Fisher is the International Trade Counsel for 3-A SSI, http://www.bartsfisher.com.