Above: Katherine Tai speaks during her confirmation hearing in Washington, D.C. on Feb. 25. Source: Bloomberg
On February 25, 2021, the Senate Finance Committee held hearings on the nomination of Katherine Tai to become the next United States Trade Representative. Ms. Tai currently serves as the Chief Trade Counsel for the US House Committee on Ways and Means. As the Chief Trade Counsel, she has played a significant role in the House’s negotiations with the former Trump administration regarding the US-Mexico-Canada Agreement (USMCA).
In her opening remarks, Tai stated that her first priority would be to help American communities emerge from the pandemic and related economic crisis. With regard to trade specifically, she discussed the importance of a worker-focused trade policy.
Some key responses on questions related to US-India bilateral trade:
- Market access: India is a key market for Washington state apples, and prior to the imposition of tariffs of up to 70% by India, the value of the market for Washington apples was $120 million – today the value of the market is around $4.9 million. India has called for the requiring of certification that export shipments are free of genetically engineered crops, additionally, India will close its market for apples originating in the US on March 1st if no agreement has been reached between the two countries. Under the former Trump administration, India’s preferential trade status under the GSP program was terminated. When questioned by Senator Cantwell (D-WA) about ensuring India keeps its markets open to the US apples market as well as reducing their tariffs, Tai responded positively, stating she “understand[s] the detrimental effects that India’s tariffs have had on Washington apple exports…” and is looking forward to working to support Washington’s growing apple industry.
- Digital Services: There is concern regarding India’s recent wave of digital protectionist policies, especially with regard to their move to restrict foreign investment in e-commerce, sweeping requirements to localize data, and proposals to expropriate proprietary information from US companies. The USTR Section 301 report criticizing India’s discriminatory digital tax was also brought up. When questioned by the committee, specifically by Senator Cornyn (R-TX), on committing to making digital trade and services commitments a priority for bilateral economic engagement with India, Tai responded by saying, “If confirmed, I will work with my colleagues at the Treasury Department to address the digital services taxes in the context of the multilateral effort to limit tax competition and address base erosion and profit shifting through the OECD/G20 process.”
- In response to further questioning on India’s growing digital protectionism, Tai responded by acknowledging India’s fast-growing economy, the opportunity it presents for American exporters, and the ongoing challenge of balancing the interests of the United States with that of India’s.
- Economic Reforms: Deepening the relationship with India is necessary to counter China’s growing influence, but it was noted that India needs to make a range of market access and liberalization reforms before any progress on FTA negotiations can be made. Senator Warner (D-VA) brought up the issue of the numerous trade barriers in the Indian market related to agriculture, digital trade, and other significant issues, to which Tai responded by further acknowledging the importance of India as one of America’s largest trading partners as well as addressing the fact that the, “Indian government has erected a number of trade barriers that unfairly disadvantage American exporters…strengthening our trade and economic relationship serves the interest of both countries.”
- Trade Agreements: Senator Young (R-IN) agreed with President Biden’s comments on how the US should be setting global trade policies and how he will not sign new trade agreements unless India increased investments in the US. Current trade talks between the two countries are at a stand-still as the Biden Administration is focused on recovering the domestic economy. When pressed further on how the Biden administration will improve trading relationships with India as well as potential for broader trade agreement negotiations and trade issues that will be prioritized, Tai remained firm in her commitment to engaging with India to resolve many of these issues in order to serve the interest of both countries.
Noted as an ‘experienced trailblazer who deserves swift confirmation’, if confirmed to the position of US Trade Representative, Katherine Tai would be the agency’s first woman of colour to take up the mantle in a historic nomination.