Administration officials are weighing major changes to a global trade pact just days before the president is set to formally introduce it in California, three people familiar with the matter said, as top Democrats warn against the administration’s current plan.
With President Biden planning to announce the trade deal with a dozen Asian countries at a summit in San Francisco this week, his senior aides are trying to decide whether or how to bend to increasingly urgent warnings from Democrats, some of whom fear it could give Donald Trump a potent political attack line in the 2024 election.
The Indo-Pacific Economic Framework for Prosperity, which officials across the administration have worked on for more than a year, aims to bind the United States more closely to allies in the region as a way to counter the growing influence of China. Although hundreds of diplomats have already gathered in California for the announcement and a trade summit, their efforts have been complicated by resistance from Democratic senators and some labor leaders in Washington.
White House officials were warned months ago about Democratic concerns, but they instructed officials to move forward with the agreement until an abrupt reversal in the last several days, the people said, speaking on the condition of anonymity to discuss private conversations.
Sen. Sherrod Brown (D-Ohio), facing a difficult 2024 reelection battle, has said publicly and in private conversations with senior White House officials that the trade deal should leave out its most consequential section because it does not include environmental and labor protections. Administration officials have eyed adding those protections at a later date.
The last-minute scramble reflects the collision of two of Biden’s chief goals: countering China and marching in lockstep with labor unions. Many Democrats are privately worried that Trump may use the new Asia trade deal to reprise his 2016 arguments against an Obama-era Pacific trade deal that infuriated U.S. labor unions and was later scrapped by Trump, even though the current deal does not include the measures in the Obama administration’s proposal that upset labor groups. But it is also difficult to convince poorer Asian countries to agree to the kind of worker standards sought by the U.S. labor movement that Biden has prided himself on championing. The key part of the new agreement would aim to bolster trade by setting common commercial rules across the agreement.
“The trade pillar is challenging because Biden promised the American public he’d only do worker-centered trade deals, and so far some of the other IPEF countries are not on board,” one person briefed on the talks said.
A White House spokesperson declined to comment on potential changes to the deal. A spokesperson for the U.S. Trade Representative also declined to comment.
“Throughout the IPEF negotiations, we have focused on promoting workers’ rights and raising standards,” a spokesperson for the National Security Council said in a statement. “We are on track to achieve meaningful progress and lay the foundation for a new framework for regional economic cooperation.”
With wars raging in the Middle East and Europe, Biden has eyed the broader deal in Asia as a crucial foreign policy victory, bringing rising powers such as Vietnam and Indonesia in closer alignment with the United States at a particularly vulnerable moment for the Chinese economy. Closer trade ties to these nations have a geopolitical and economic purpose, as the United States looks to move supply chains out of China amid rising hostilities with Beijing.
Negotiators have been working to strike a deal that consists of four “pillars.” The second, third and fourth call for the countries to take joint action on supply chains, climate infrastructure and tax evasion, but those are largely aspirational. The agreement’s first pillar, however, includes binding provisions that require participating countries to align trade standards with the goal of increasing business ties between the nations.
Pillar one has provoked most of the agreement’s controversy. That’s the part of the deal would set common rules across a range of industries, including the service sector and agricultural products, to increase trade between the nations involved.
Biden is due to travel Tuesday to California to the Asia-Pacific Economic Cooperation conference to tout the economic benefits of the U.S. partnership in the region. The trade deal is expected to be announced next week, with the president also expected to meet with his Chinese counterpart, Xi Jinping, on Wednesday.
“Now that the Chinese economy is in growing trouble, it makes sense the U.S. consolidates recent gains and pushes out on trade in the Indo-Pacific,” said Joseph Brusuelas, chief economist at RSM. “This represents a good first step in the right direction.”
And yet the administration faces angst among allies who are worried about the political and economic repercussions of a deal. Even if the administration claims to want to negotiate the rest of the labor and environmental standards, it is unclear how more time would allow them to cement a deal with recalcitrant countries.
Brown, the Senate Banking Committee chair, on Thursday publicly said that any trade deal without enforceable labor standards is “unacceptable” and “goes against everything I stand for.” Senate Finance Committee Chair Ron Wyden (D-Ore.) has also expressed concern about the lack of labor protections in the deal, an aide confirmed.
Democrats still feel burned by Barack Obama’s support for the Trans-Pacific Partnership, which led to a fracture with labor unions that many party officials still believe helped Trump win the White House in 2016. The elements of that deal that most upset labor unions are excluded from the current agreement.
“The question here, as it was under Obama, is if U.S. foreign policy has meaningful regard for workers rights, or is it just we want to increase cooperation with Vietnam hoping to pull Vietnam further away from China?” said Larry Cohen, former president of the Communications Workers of America. Cohen said there is substantial fear among union leaders about the IPEF deal’s exclusion of labor standards. “The concern here is that there’s no enforcement of real labor rights.”