On Bloomberg TV, Portman Discusses Indo-Pacific Economic Framework, Ukraine, Soaring Inflation in the U.S.

May 24, 2022 | Portman Difference

Senator Portman joined Bloomberg TV this afternoon to discuss the Indo-Pacific Economic Framework – though the framework does not include market access, Portman said it would lead to reducing barriers in the region, which is a good thing. When asked if including market access would be doable in a trade agreement in the region, Portman argued that an agreement of that nature would be most plausible with Japan – given the Trump administration already put a phase one agreement in place with Japan, the U.S. is about a third of the way towards an actual free-trade agreement with the country. Portman said such an agreement would put the U.S. in a much stronger position in the Indo-Pacific area and could lead to similar agreements with some of the smaller countries in the region.

Portman also discussed Russia’s blockade of Ukrainian ports, particularly Odessa, which has not allowed for any Ukrainian exports to leave the country by sea. Ukraine is one of the world’s largest agricultural producers and its inability to ship its products means that many poor countries, already suffering from food insecurity, will be devastated. Portman called for a humanitarian corridor to be opened to get the exports out, saying the United States should play a central role, but so should the United Nations and every other country who believe that it is important to have these exports continue.

Finally, he touched on this country’s record high gas prices, inflation, and the importance of supporting and expanding energy production in North America. With soaring demands for energy, leading to the highest inflation in forty years, Portman said it is crucial we address the supply side of the issue – energy production – in order to fight the surging inflation and the rising prices.

A transcript of the interview can be found below and you can also watch the interview here.

PORTMAN ON THE INDO-PACIFIC ECONOMIC FRAMEWORK

“Well, first David thanks for having me on. It’s always great to be on with you and to get into some more depth on some of these issues. With regard to the Indo-Pacific Economic Framework we talked about earlier, unfortunately that does not include market access, so it is not a trade agreement per say. If it were, it would help in terms of inflation; it would help in terms of reducing barriers in the region. That is the next step that ought to be taken. I’m not saying it’s a bad thing, it’s a good way to sort of put our foot in the water again in the Indo-Pacific region. With regard to the tariffs from China, those were based on a Section 301 investigation, which found that China was unfairly trading in those products and others. It is based on fairness, it’s not based on national security or other things, such as Section 232. We need to deal with that. On the other hand, I think it is in our strategic interest to have an exclusion process, where as an example, if you are an importer of one of these products from China, you’re facing 25 percent tariff, you cannot find that product in the United States, which is the case in some cases. That tariff would no longer apply; in other words, if there’s not any competition with an American company making the same product. But where there is competition, which is most of these cases, and China is not playing by the rules, I don’t think you want to take away this tool of Section 301, and the ability to put tariffs on China to help to level the playing field.”

PORTMAN ON THE POTENTIAL FOR MARKET ACCESS IN AN INDO-PACIFIC TRADE DEAL

“I think what’s doable is an agreement with Japan. Remember during the Trump administration, there was phase one agreement with Japan to lower some of the barriers in Japan to our exports, including on the agriculture side, which was a breakthrough. I would say we are about one third of the way toward an actual free-trade agreement with Japan already because of that phase one agreement. Japan is by far the largest economy in the old Trans-Pacific Partnership group, with which we do not already have a trade agreement. Most of the countries, we already have a free trade agreement with, you think about Singapore as an example or Australia or the countries in South America on the Pacific – but we do not with Japan and it’s the biggest economy, it would make the most impact. And politically, I think that is much more viable, is to complete a free-trade agreement with Japan, which would then put us in a much stronger position in the Indo-Pacific area and we could start having agreements with some of the smaller countries, as well, like Malaysia or Vietnam. So I think that’s the best step to take. I’ve urged that on the administration, they are not moving forward with the free-trade agreements as you know. An easy one is U.K., because that’s almost done, and started in the Trump administration. But Japan, I think, should be right up there. And if that were done, it would really make a big impact in terms of our economy and in terms of our footprint in the Asian-Pacific area.”

PORTMAN ON THE RUSSIAN BLOACKDE OF UKRAINIAN EXPORTS

“Well, that would be great. It is a crime, what is happening in Ukraine, on so many levels. One is, that the Russians have effectively made Ukraine into a landlocked country by blocking these ports into the Black Sea, Odessa being the single most important one. Recall that some years, Ukraine is the number one exporter of sunflowers and sunflower oil, number two in terms of wheat and the countries particularly in the developing and in Africa and elsewhere depend on this. And yet, because of this war, this war that was totally unprovoked, totally illegal, and now brutal from Russia, these ports are being blocked. And by the way, they have to be blocked on both sides. In essence, the Ukrainians are putting mines in place to avoid Russian warships from coming into Odessa and then the Russians are doing their own, we’re not quite sure exactly what it is, but mining to avoid the Ukrainians using these ports. So, yes, it would be great to have what I call a humanitarian corridor there to at least allow these grain shipments to get out. The grain bins in Ukraine are full right now and yet the farmers are told to plant, they are not sure where their products are going to go. If you told them the exports can continue, that can actually continue to ship these exports, because the trains and the trucks cannot take nearly the quantities, that would make a huge difference. I hope warships wouldn’t be necessary because I hope Russia would say, “okay why would we block grain going to Africa and other poor countries,” to keep starvation from happening? Which could happen over the next year if we do not do something. My hope is that we can have that corridor opened up. The United States should play a central role here, but so should the United Nations and every country in the world that believes that this is important to have these exports continue.”

PORTMAN ON HOW TO COMBAT SOARING INFLATION AND GAS PRICES IN THE U.S.

“Well David, right now, it is very clear that we still have demand that’s outpacing supply and unfortunately the inflation numbers seem to be getting worse in some categories, not better. Certainly, not better in any substantial way. So, the worst inflation in forty years, we have seen it with the gas prices, I’m seeing projections of six dollars a gallon. It’s a huge problem, so what should we do on the demand side? Well one, we should not put more surplus spending or stimulus spending into the economy because that is what generated so much of this. You remember, almost $2 trillion – $1.9 trillion dollars – was put into the economy of March of last year, at a time when the Congressional Budget Office, a nonpartisan group, and others all said the economy is doing just fine. In fact, it will recover to pre-COVID levels by midyear last year, which it did. But yet, the administration insisted on dumping this huge stimulus in. You recall, people like Larry Summers, who was Secretary of Treasury under President Clinton and the National Economic Council under President Obama, said this would cause inflation and he was right. That’s something we can’t do, is put more stimulus spending in, as it’s being proposed under this Build Back Better. Second, don't raise taxes right now, because if you are raising taxes on business, which is also a proposal by the Democrats, you are going to hurt the supply side. And then third, how do you expand that supply? Because it is a demand-supply issue and there’s no question in addition to the stimulus spending that was put in there, COVID did result in a more constrained supply. That’s starting to free up now and that’s good. One thing that’s easy to do, and should be done immediately, is to free up more supply on the energy side, because just as inflation broadly is defined by too much demand, not enough supply, so is the gas prices at the pump. So that would mean more oil production here in this country, taking us through this period so that we have the opportunity, and a more environmentally sound way by the way, to use our own oil here, rather than importing more and to try and get these prices down. That is an inflation issue right now. How do you deal with gas prices? And there’s a solution, which is to increase the supply, not just focus as the Fed must, on the demand side.”

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