Submitted to the Office of the U.S. Trade Representative in Response to June 11, 2023, Request for Public Comment on Ways Trade Policy Can Advance Racial and Gender Equity and Support Historically Underserved Communities
Thank you for this chance to offer suggestions on ways trade policy might better meet the needs of America’s underserved families and communities. I am Vice President of the Progressive Policy Institute (PPI), a 501(c)(3) nonprofit think tank established in 1989, which publishes on a wide range of public policy topics. My research focuses principally on U.S. international economic policy, with a particular focus on trade issues. I previously served for nine years at the Office of the U.S. Trade Representative, including as agency speechwriter (1998-2001) and as Assistant U.S. Trade Representative for Policy and Economics (2015-2021). In the latter capacity I oversaw USTR’s economic research and use of trade data, administration of the Generalized System of Preferences, and policy coordination work including concurrent service as Chair of the Trade Policy Staff Committee.
I would like to focus on two questions USTR poses in its June 12 Federal Register notice:
“Are there trade policies, provisions, or actions which are detrimental to advancing racial and gender equity, equality, and economic empowerment?”
and
“What best practices should USTR consider to ensure that advancing equity, equality, and economic empowerment is standardized in community and stakeholder engagement regarding the development and implementation of U.S. trade and investment policy?”
As a point of departure, I applaud Ambassador Tai’s sustained interest in understanding any detrimental effects trade policy may have on underserved Americans, and finding ways policy might more effectively meet their needs. There is strong evidence that the tariff system has some detrimental effects in several areas, and in some ways, it presents an unfortunate contrast with other American taxes. Specifically, it taxes cheap and simple consumer goods much more heavily than analogous luxuries, and taxes many women’s clothing products at higher rates than analogous men’s clothes. This makes the tariff system an unusually regressive part of the American tax system, and likely the only one with an explicit gender bias. Many of the peak tariff lines apply to products not made in the United States, and could be revised without harm to U.S. growth or existing employment though at some modest cost in revenue.
The second question, on ways USTR might draw more advice from lower-income and underserved communities is more challenging. Trade agreements are often intensely debated and sometimes termed “non-transparent.” The permanent systems an agreement modifies, though, are typically far less frequently debated and seem to be largely opaque not only to the public but to many experts. This means communities affected badly by these systems rarely know they are affected, are thus relatively unlikely to respond to solicitations for advice, and may have difficulty even responding to direct outreach. U.S. officials hoping to encourage their participation in policy development might as a first step develop more detailed, regular, and contextual publications on the way these systems function and how they affect different groups within American society. This would help build understanding at least within the government, Congress, and academic communities, perhaps elicit ideas and ways to improve them, and likely encourage more informed discussion with underserved communities.
A more detailed discussion of these topics follows: first, on the regressivity of consumer goods tariffs and their consequent impact by income level and race/ethnicity; second, the gendered nature of the clothing tariff schedules, and the unintended but explicit bias this has created; and third, the challenge of drawing advice on policy from “underserved” communities.
