Chairman Paul Ryan Playing for Keeps on Trade, Tariff Abatement
February 6, 2015
Ways and Means chairman Paul Ryan communicated a clear message at the Washington International Trade Association on Thursday, in what was his first major public address on trade: The U.S. needs to get back in the driver’s seat. Highlighting the critical role of trade for the strength of the U.S. economy, Ryan stated his highest priority is to complete the many trade agreements the U.S. is currently negotiating. In his remarks, Ryan also outlined a vision including stronger measures against disruptive countries and trade partners who are unwilling to respect the rule of law and liberalize tariffs and onerous regulations.
Completing Trade Agreements are at the Top of Ryan’s Agenda
Ryan’s speech featured a firm commitment to expanding the U.S. trade agenda. The Chairman cited its many benefits, such as significantly higher average pay for workers employed at exporting companies, more and better choices for U.S. consumers, and lower input costs for U.S. manufacturers.
Two trade agreements particularly emphasized were the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (T-TIP), albeit other treaties under development such as the Trade in Services Agreement (TISA) and Environmental Goods Agreement (EGA) were also mentioned.
The TPP—expected to enter into its final phase of negotiations during 2015—includes 11 other countries and provides U.S. companies better access to fast-growing economies in the Asia-Pacific. A Peterson Institute of International Economics estimate approximates the positive impact from the TPP to be 0.4 percent higher U.S. GDP by 2025.
A bilateral initiative between the U.S. and the European Union, the T-TIP is also a highly anticipated treaty. Research conducted by the Centre for Economic Policy Research suggests U.S. gains in GDP of 0.4 percent by 2027 as a result of full implementation.
Sharp Rhetoric toward Nations Disinclined to Reduce Tariffs and Prune Onerous Regulation
The benefits of trade are obvious, yet ongoing disputes regarding tariffs and regulations are a threat to reaping the fruits of the budding U.S. trade accords. Although Ryan’s speech was predominantly delivered in the spirit of optimism, he issued stern critique toward players hampering the impetus of free enterprise and free markets worldwide. His remarks focused primarily on China, with respect to cronyism and structural opposition to free enterprise, and, on the EU, Canada, and Japan, in terms of unjustifiably high tariffs and burdensome regulations.
Specific to tariff policy, Ryan’s main focal point was agricultural and food tariffs. In his vision for the TPP to move forward, Japan and Canada must lower their import duties. Certain tariffs in Japan, for example, can reach 700 percent. In Canada, import taxes—especially for poultry, egg, and diary products—have to decline, Ryan argued.
Moreover, the Ways and Means chairman demanded of the EU both regulatory relief and complete removal of tariffs. He scoffed at excessively bureaucratic European administrative language by providing an example of how absurdly a Wisconsin bratwurst was labeled in Europe and, by applying that same “labeling” technique to the Green Bay Packers, “[making them a team that] engages in ‘soccer-like activity’”—a relatively abstract and imprecise characterization.
Ryan’s Priorities to Propel U.S. Trade Prospects
Ryan stated that the enactment of the Trade Promotion Authority is essential to significantly enhancing U.S. prospects in negotiating trade partnerships and to advancing its overall trade mission. This act would give Congress more authority on ongoing trade issues and convey to trade partners that the administration and congress have a more unified approach. U.S. Trade Representative, ambassador Froman, similarly highlighted this measure in his testimony before the Ways and Means Committee on January 27, 2015.
In addition, Ryan further developed his modus operandi in a four-item “wish list.” These initiatives, he underscored, would further unlock U.S. jobs and economic growth.
1. Reauthorize the General System of Preferences (GSP), which enables preferential tariff treatment for countries who export goods that U.S. businesses demand;
2. Renew the African Growth and Opportunity Act;
3. Propel the Miscellaneous Tariff Bill, facilitating elimination of import duties on manufacturer inputs not produced in the U.S.; and
4. Enact the Customs Trade Facilitation and Enforcement Act, which strengthens enforcement measures and increases accountability of trade partners.
Indeed, Ryan delivered an ambitious vision for his trade agenda. But it suggests he is playing keeps for the advancement of trade, tariff abatement, and free enterprise.