By Gavin Bade

U.S. Trade Representative Katherine Tai speaks during a World Trade Organization event on Tuesday, April 11, 2023, in Washington. | Alex Brandon/AP Photo

FIXER UPPER — The Biden administration continued its campaign to rewrite the rules of global economics this week by taking steps to fix the leading institution of globalization: the World Trade Organization.

The global trade body has been dysfunctional since 2019, when the Trump administration refused to name judges to its highest dispute-settlement body, rendering it unable to make decisions. Since then, the hobbled WTO has served as a symbol of how American populism has alienated the U.S. government from the rules-based international system that it helped create at the end of the (first) Cold War.

Now, Biden says he wants to fix that as he seeks to rebuild America’s reputation abroad. While the administration has still refused to name new WTO judges, his trade chief today issued a public plea for world nations to bring ideas to reform the global trading body to its next high-level meeting in February.

“Right now, being committed to the WTO also means being committed to a real reform agenda,” U.S. Trade Representative Katherine Tai said in Washington, flanked by the WTO’s Director General, Ngozi Okonjo-Iweala.

But exactly what the U.S. wants can be tough to decipher. While Tai and other U.S. officials talk about lofty goals for the WTO, they refuse to commit to specific reforms or name new WTO judges until changes are made. If they make explicit proposals, U.S. officials fear the policies would be dismissed out of hand by WTO members. Such is Washington’s degraded reputation in Geneva.

But Tai’s speech and an exclusive interview with POLITICO this week give a few hints at what the administration really wants: WTO rules that give the U.S. and its allies more latitude for green industrial policy — like Biden’s Inflation Reduction Act — and less leeway for China.

“We’ve talked about reform of the WTO to better combat Chinese industrial policy,” said Peter Harrell, the former international economics lead on Biden’s National Security Council, who stepped down last fall. “Now, it’s very much that we also want to reform the WTO to better enable our own industrial policy, and how you square that circle I think is going to be an interesting one.”

On China, Tai is most explicit. “Certain members,” she said today in a thinly veiled reference to China, “seek to dominate key industrial sectors, promote national champions and discriminate against foreign competitors, massively subsidize sectors and manipulate costs.”

Changing that situation could involve ending the ability of WTO members like China to self-designate as “developing nations” — which allows them to skirt rules against state industrial supports. That’s a common call among U.S. lawmakers, who argue it has allowed Beijing to pour subsidies into critical sectors like steel and clean energy, without running afoul of WTO rules. It’s an argument Tai echoed today.

“We cannot have economic and manufacturing powerhouses gaming the system by claiming the same development status flexibilities intended for less advantaged members,” she said.

But more immediately, Tai wants the WTO to allow the U.S. to respond to China itself — subsidizing its own industries to counteract China’s state-led economy. That’s the logic behind the domestic manufacturing incentives in the IRA, which have begun to attract some factories back to the U.S., but have also been challenged in Geneva for violating WTO subsidy rules.

Tai’s response is that the WTO should butt out. WTO rules contain an exemption that allows members to support domestic industries in the name of national security. Tai reiterated today that the global trade body should not question when nations like the U.S. want to use that exemption — like the WTO did last December, when it ruled against Trump-era steel and aluminum tariffs. 

“We urgently need to correct WTO panel reports that have asserted that the WTO may second-guess members’ legitimate national security judgements, something none of us ever intended,” Tai said. “This calls into question foundational principles of how far-reaching trade rules should be.”

But the U.S. may have to give something up to make progress on those fronts. Before rewriting rules on industrial policies, Harrell said the U.S. side may need to show goodwill by agreeing to start nominating judges to the defunct Appellate Body — the WTO’s highest dispute settlement panel — again.

“If the U.S. offer is that we’re not going to put judges on [the Appellate Body] until after we reform the WTO, then the Appellate Body is not coming back to life,” Harrell said.

For now, that appears unlikely. Tai said today that the U.S.’s goal is “not restoring the Appellate Body or going back to the way things used to be,” but rather “providing confidence that the system is fair.” That could derail ongoing conversations in Geneva over how to restore the dispute settlement system, and threaten Tai’s assertion that the U.S. is serious about restoring the global trading body. There’s more on those discussions and the wider context for negotiations in our exclusive interview with Tai. 

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at [email protected]. Or contact tonight’s author at [email protected] or on X (formerly known as Twitter) at @GavinBade.

A message from American Chemistry Council – Chemistry Creates America Competes:

Powering the nation's supply chain, the U.S. business of chemistry drives innovation in semiconductors, energy, healthcare, and more. But urgent action is needed! Already buried in over one million federal restrictions, America’s chemical industry faces growing regulatory overload. The Biden Administration and Congress must correct course and do a better job thinking through the impact of unproductive restrictions on a fragile supply chain and economy. Learn more – Chemistry Creates, America Competes.

— Menendez charged with taking bribes to help business cronies, Egyptian government: A federal grand jury in New York indicted Sen. Bob Menendez (D-N.J.) and his wife, charging the two with bribery in connection with their relationship with three New Jersey businesspeople, according to an indictment unsealed today. Federal prosecutors accused the couple of accepting hundreds of thousands of dollars in bribes in cash, gold bars, a Mercedes-Benz C-300 convertible and home mortgage payments in exchange for using the senator’s position to benefit the businesspeople and the government of Egypt between 2018 and 2022. The two were charged with conspiracy to commit bribery, conspiracy to commit honest services fraud and conspiracy to commit extortion.

— Biden agrees to send long-range missiles to Ukraine: President Joe Biden promised his Ukrainian counterpart, Volodymyr Zelenskyy, that the United States will soon provide Kyiv with a small number of long-range missiles to help its war with Russia, according to two U.S. officials familiar with the matter. Biden made the pledge to Zelenskyy during the Ukrainian leader’s visit to the White House on Thursday, fulfilling a long-held wish by Kyiv. The Army Tactical Missile Systems will likely be delivered to Ukraine in the coming weeks.

— Monopoly busting lawsuit against Amazon expected next week: A long-awaited antitrust case against Amazon’s massive online retail operations is expected to be filed in federal court as soon as Tuesday, according to three people with knowledge of the matter. The Federal Trade Commission has been preparing a complaint since at least the start of this year targeting an array of Amazon’s business practices. The exact details of the lawsuit are not known, and changes to the final complaint are possible until it’s officially submitted. But personnel throughout the agency, including FTC Chair Lina Khan herself, have homed in on several of Amazon’s business practices, POLITICO has previously reported.

— Biden to join the picket line in UAW strike: President Joe Biden will travel to Michigan to join the picket line of auto workers on strike nationwide, he said this afternoon. “Tuesday, I’ll go to Michigan to join the picket line and stand in solidarity with the men and women of UAW as they fight for a fair share of the value they helped create,” Biden wrote on X, the platform previously known as Twitter.

Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of the first episodes in September – click here.

LOSING CLOUT — Florida Gov. Ron DeSantis is losing his clout in Florida. College boards, stacked with DeSantis appointees, are rejecting job candidates with ties to the governor, writes POLITICO.

The chair of the Republican Party of Florida urged executive committee members to attend all GOP candidate events — giving cover to party faithful who want to attend a dinner at Mar-a-Lago with former President Donald Trump. And the board that oversees many of Florida’s affordable housing programs this month placed on leave its executive director, who was helped into the job by a top DeSantis adviser.

Interviews with nearly two dozen lobbyists, political consultants and lawmakers revealed that DeSantis’ struggles as a presidential candidate have already eroded his influence in Florida. There is a widespread expectation that his candidacy will end in failure. His standing at home may depend on how long he slogs forward in the presidential campaign — and how he will manage his exit from the race if he eventually drops out.

HALEY GOES THERE — Republican presidential candidate Nikki Haley laced into Donald Trump in a speech laying out her economic plan today, faulting the former president for “reckless spending,” reports POLITICO.

“Joe Biden is proving reckless spending is the road to socialism. But he’s not the only culprit,” the former South Carolina governor said in a speech in New Hampshire, which focused on tax cuts and reducing spending. “Joe Biden, Donald Trump and Barack Obama added more to our national debt than the previous 42 presidents combined.”

In unveiling her so-called Freedom Plan, Haley said she will aim to eliminate the federal gas tax, reduce income tax rates, make small-business tax relief permanent, reduce spending to pre-pandemic levels, mandate zero-based budgeting and cut green energy subsidies.

UAW CALLS OUT SCOTT — United Auto Workers president Shawn Fain has filed a National Labor Relations Board complaint against Sen. Tim Scott, accusing the South Carolina Republican senator of “engaging in unfair labor practices” over a remark he made during a campaign event Monday, reports NBC News.

The comments in question came at a presidential campaign event in Fort Dodge, Iowa, where an audience member asked Scott a question about the United Auto Workers strike..After an Iowa voter asked him about the labor talks, Scott repeated the question back to the audience: “Would I as president of the United States insert myself into this labor dispute?”

“Let me answer the first question,” he said. “I think Ronald Reagan gave us a great example when federal employees decided they were going to strike. He said, you strike, you’re fired. Simple concept to me. To the extent that we can use that once again, absolutely.” In the complaint filed Thursday, Fain accused Scott of violating the National Labor Relations Act in his capacity as an employer through “Tim Scott for America,” his political campaign.

A message from American Chemistry Council – Chemistry Creates America Competes:

President of the French far-right Rassemblement National (RN) group Marine Le Pen at the National Assembly in Paris on July 4, 2023. | Emmanuel Dunand/AFP via Getty Images

PROSECUTION PUSH — The Paris prosecutor’s office today called for French far-right leader Marine Le Pen and her party to stand trial for the alleged misuse of EU funds, writes Claudia Chiappa.

The prosecutor’s office said they are requesting a trial for the right-wing National Rally party and 27 people, including Le Pen and her father, Jean-Marie Le Pen, for allegedly misappropriating EU public funds between 2004 and 2016, according to French local media.

The request for trial marks the latest development in a seven-year investigation into allegations that the National Rally used public funds, which were meant for EU parliamentary assistants, to pay party staff. Judges will make a decision on whether or not to accept the prosecutor’s petition for trial.

Among the people listed by the prosecutor’s office are former MEP Bruno Gollnisch and the party’s vice president and mayor of Perpignan, Louis Aliot.

According to the prosecutor’s office, those involved face 10 years in prison, a 1 million euro ($1.06 million) fine, and ineligibility to hold public office for five or 10 years, depending on whether they are an elected official.

ATTACK AT SEA — A rocket attack was launched against Russia’s Black Sea fleet today, with one missile damaging the fleet’s headquarters building in Sevastopol in Russian-occupied Crimea, the local Russian-backed governor said.

Five missiles were shot down with anti-aircraft defenses, according to the Russian defense ministry. “According to available information, one serviceman was killed,” the ministry said in a statement today.

“The enemy launched a missile attack on the fleet headquarters,” Sevastopol Governor Mikhail Razvozhayev said on Telegram. Shrapnel fragments fell near a theater. Information about victims was being confirmed, he said.

“Another attack is possible,” Razvozhayev added, urging locals to stay out of the city center.

Kyiv, as usual in these cases, did not immediately take direct responsibility for the attack. “The only thing I can confirm is that as a result of the aggression against Ukraine, the Russian troops in Crimea are suffering significant losses of manpower and equipment,” Andriy Cherniak, representative of the Military Intelligence Directorate of the Defense Ministry of Ukraine, told POLITICO, refusing to add any more details.

HAPPENING 9/28 — INSIDE THE CANCER MOONSHOT: Join POLITICO on Thursday, Sept. 28 for an in-depth discussion on the future of cancer treatment and innovation. Hear from experts including scientists, government officials and industry leaders as we explore the critical roles played by private industry, nonprofits, the National Cancer Institute and the new Advanced Research Projects Agency for Health in achieving the Biden administration's goal of cutting the cancer death rate in half over the next 25 years. Don't miss this opportunity to dive into the progress of cancer treatments and learn about the challenges patients encounter in accessing care. REGISTER HERE.

RISING HATE — Throughout much of the Western hemisphere — from the United States to France to Denmark — new data shows that “Active Clubs,” essentially fight clubs for Neo-Nazis, are growing. Since the first Active Club was created in 2020, over 100 have sprouted up. And the groups, while explicitly white nationalist, hide their intentions more than other Neo-Nazi organizations. They do so by focusing on the fitness aspect of their work, including training in Brazilian jiu-jitsu and boxing. According to experts, the trend is concerning; it’s an unprecedented level of growth for right-wing extremists. For VICE News, Mack Lamoreux digs into the data and what it means.

On this date in 1989: Vietnamese soldiers receive flags from cheering bystanders in Battambang, Cambodia as their bus departs in the withdrawal of the last 26,000 Vietnamese troops in Cambodia after 10 years of occupation. | David Thurber/AP Photo

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A message from American Chemistry Council – Chemistry Creates America Competes:

The nation’s supply chain runs on the U.S. business of chemistry. When chemistry creates, America competes.

Semiconductor computer chips, automotive, healthcare, building & construction, infrastructure, and energy all rely on chemistry. From electric vehicles to smartphones, America’s chemical manufacturers power innovations we can't live without.

However, there’s a grave challenge. A regulatory overload and lack of coordination between federal agencies is handicapping American chemistry’s ability to create products that support national priorities, jeopardizing the economy and America’s ability to compete with countries like China. This tidal wave of unproductive regulatory proposals could disrupt the supply chain for crucial technologies and everyday products.

The Biden Administration and Congress must support, not thwart, critical chemistries and innovation. Learn more – Chemistry Creates, America Competes.

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