Gina Raimondo will play a significant role implementing President Biden’s economic and trade agenda for lifting up the working class if the U.S. Senate, as expected, confirms her as secretary of commerce.
Lawmakers view her as a steady hand who will return the department to many of its traditional roles supporting business in stark contrast to predecessor Wilbur Ross, the billionaire businessman who mostly disappeared in the second half of the Trump administration after initially pushing punitive policies against many trade partners.
The Rhode Island governor said Tuesday her overarching priorities will be deploying resources to help communities recover from the economic damage caused by the pandemic, supporting the manufacturing sector through investment and tough enforcement of trade rules and pushing companies to embrace sustainability as a way to address the climate crisis and improve their bottom line.
“We need to ensure that American workers and manufacturers can compete fairly on the global playing field. We need to invest in innovation and technology in our manufacturing sector and take aggressive trade enforcement actions to combat unfair trade practices from China and other nations that undercut American manufacturing,” she said in opening remarks to the Commerce Committee. “If confirmed, I look forward to deploying the full resources of the agency to keep the American worker at the center of U.S. trade policy and to reinvigorate American manufacturing by reshoring jobs that have gone overseas. When given a fair chance, no one can outcompete the American worker and small business.”
As governor, Raimondo, a Harvard and Yale Law School graduate, was a strong advocate for offshore wind energy and built up Rhode Island’s workforce development program. Earlier, she helped found a venture capital firm.
The Department of Commerce is tasked with ensuring businesses and workers can compete fairly in the global market, growing the marine economy through the promotion of transportation and shipbuilding, promoting 5G deployment and improving rural broadband access, improving the nation’s cybersecurity and elevating space commerce.
Raimondo’s confirmation will not be contentious because GOP lawmakers are happy Biden nominated someone with her qualifications, said Josh Finestone, a senior policy adviser at Venable LLP and a former Commerce Committee staff member on the Republican side. Other than some questions about her policies on broadband and fisheries, she should have an easy process, he added.
The White House is pushing for a $1.9 trillion economic relief package to sustain businesses and workers until the pandemic is contained and also is touting a large infrastructure package to modernize transportation, broadband, energy, water and waste treatment, and other major systems. As the government’s lead agency for dealing with the business community, especially manufacturers, the Commerce Department will be heavily involved in determining how those dollars are spent, but carrying out those policies will depend on how much funding is approved by a narrowly divided Congress.
The commerce secretary will also have responsibility for implementing some of Biden’s new Buy American order for government procurement, said Ed Alden, a senior fellow at the Council on Foreign Relations who specializes in U.S. economic competitiveness, trade and immigration policy.
“And to the extent the administration is directing aid to certain favored industries, particularly for purposes of competing with China, Commerce is going to be in the middle of that too,” he added. “Specific sectors such as medical supplies and semiconductors are going to be in line for a variety of government subsidies to increase domestic manufacturing capacity.”
Rhode Island has suffered significantly from manufacturing job losses and revitalizing the sector has been a central issue in the state. Raimondo remarked in her testimony how her father was forced into early retirement when the Bulovo watch factory closed in the 1980s and the family had to cut back.
Trade Policy
On trade, Raimondo is expected to fall back in line with more traditional commerce responsibilities, such as helping negotiate bilateral agreements and enforcing laws to level the playing field for U.S. companies.
Ross used his early influence to counsel former President Donald Trump to withdraw the U.S. from the Trans-Pacific Partnership Agreement negotiated by President Barack Obama; strong-arm Canada and Mexico to rewrite NAFTA with terms more favorable to the U.S.; and threaten 35% tariffs on companies that relocated plants to other countries. He also used the Commerce Department to launch unprecedented investigations into alleged harm caused by steel and aluminum imports on national security grounds, which led to large tariffs on imports from many allies. So-called 232 investigations were also conducted on automobiles and auto parts, mobile cranes and several minerals, although sanctions were ultimately never imposed.
Alden, who wrote “Failure to Adjust: How Americans Got Left Behind in the Global Economy,” said Ross was an old-fashion protectionist. “He saw his role as one of using tariffs and other import protection measures to try and shield certain favorite industries, particularly steel, from foreign competition. Industrial policy approach is more about how does the U.S. better meet the challenge of growing competition from abroad. And sometimes that can involve the selective use of protection.
“But more it involves a forward-looking agenda that says, ‘How can the U.S. compete better in the global economy? What are the sectors where we have advantages? How do we leverage those advantages? How do we spread the benefits out into the country more broadly.’ So, to my mind, industrial policy is quite different than what Ross did. Ross was a protectionist. And most of the protection was focused on older industries that aren’t really creating that many jobs anymore.”
Many political observers believe Biden will maintain Trump’s Section 301 tariffs on China as leverage to get more cooperation on China’s anticompetitive trade practices, but Alden said that is not a certainty.
Although Biden has repeatedly said he won’t immediately lift the China tariffs “that doesn’t translate into they are going to stay in place indefinitely. The tariffs have hurt a lot of U.S. manufacturers and finding ways to ease or lift those tariffs is almost certainly going to be part of a manufacturing revitalization strategy. The question is how to do that in a way that works politically and hopefully extracts some concessions from the Chinese. But I do not expect tariffs to play the central role in a Biden trade policy that they did in a Trump trade policy,” Alden said.
Ashley Craig, co-chair of Venable’s international trade group, said he’s been told Raimondo will reestablish the long-standing U.S.-China Joint Commission on Commerce and Trade — a forum for addressing bilateral trade matters and promoting commercial opportunities between the nations that the Trump administration shut down — as part of an effort to level-set relations and reopen dialogue.
Commerce ultimately may show more toughness against China in the area of export controls and sanctions, Alden said. In recent years, the U.S. has imposed restrictions on the sale of semiconductors and the use of semiconductor equipment to make computer chips for sale to China because of security concerns over how China would use the technology.
In addition to trade restrictions on national security grounds, the Biden administration is also expected to expand pressure on China for human rights violations. Before leaving office, the Trump administration imposed an import ban on all cotton and tomato products from western China’s Xinjiang region over allegations that they are made with forced labor from Uighur Muslims. Those sanctions are enforced by a separate department.
Craig surmised that Raimondo will also continue the traditional Commerce role of promoting exports and could also pick up where Secretary Penny Pritzker left off at the end of the Obama administration in seeking solutions to chronic congestion at major container ports.
Alden said he’s interested to see whether the Commerce Department under Raimondo will give more attention to Select USA, a program created 15 years ago to help attract job-creating foreign investment in the U.S.
“In rhetorical terms Biden is talking about American companies, Buy America and American investment. But if you look at the manufacturing sector, foreign companies play a big role. And there’s a lot more that could be done in terms of attracting foreign investment in the manufacturing sector.”
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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