Brady Predicts Congress Will Assert Itself on IPEF

Rep. Kevin Brady, R-Texas, the former House Ways and Means Committee chairman who is retiring from Congress at the end of the month, told reporters in a farewell press conference that he thinks, with divided government, the administration will not be able to impose its will in trade and international tax policies by avoiding tariff reductions.

Trade agreements do not require a vote in Congress if the tariff reductions are below a certain amount per product, and that's how the Trump administration handled its mini-deal with Japan. The Biden administration has said it does not intend to bring Indo-Pacific Economic Framework agreements to Congress for a vote, as it does not expect there to be any tariff reduction in those trade talks.

Brady said both Democrats and Republicans, in the House and Senate, agree that Congress does not think that the Office of the U.S. Trade Representative or Treasury should negotiate agreements with other countries and declare there's no need for congressional approval.

"Congress is a little fed up with this approach of deals being reached with no consultation and no approval," Brady said Dec. 14 at the Capitol.

He said he doesn't think the global minimum tax, an agreement designed to convince other countries not to levy digital services taxes, is going to become a reality. USTR suspended investigations against many countries that had proposed retaliatory tariffs over these DSTs.

"They early on gave up way too much ground to foreign countries," he said of administration negotiators. "If foreign countries seek to impose extra-territorial taxes on U.S. companies that are inconsistent with U.S. laws and treaties, then I think they should expect retaliation, not compliance. And I don’t believe Congress can be bullied by the administration, Paris or Brussels… .”

Brady said that once Republicans take the gavel in the Ways and Means Committee, he expects there will be hearings on establishing a trade agenda that goes on the offensive, seeking to negotiate trade deals that would lower tariffs for U.S. exports. He said USTR could start in the U.K. or Kenya, or by trying to conclude a comprehensive trade deal with Japan. "It’s really crucial … we need to get back on the field. I’m not sure the president understands there is bipartisan support," he said.

Brady said no one expected such a resounding vote in favor of USMCA, including from some Democrats who had never supported a trade deal before.

“To Ambassador [Robert] Lighthizer’s credit, he found a framework that could draw support from both parties. Not that that framework applies in every agreement, [but] at least in developing countries where there’s labor and environmental issues, I think it has value. And I don’t agree with all of it. But the point being, I think there’s momentum here. But you need leadership from the White House.”

Brady acknowledged that the Biden administration has not been interested in liberalizing trade, but he said President Barack Obama also initially was a trade skeptic. "But over time, what he realized is that trade is crucially important to our economy," Brady said, and "to our allies as well."