On Bloomberg TV, Portman discusses the Indo-Pacific economic framework, Ukraine and soaring US inflation

May 24, 2022

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Portman Difference

Senator Portman joined Bloomberg TV this afternoon to discuss the Indo-Pacific economic framework – although the framework does not include market access, Portman said it would lead to lower barriers in the region, which is a good thing. When asked if including market access would be feasible in a trade deal in the region, Portman argued that a deal of this nature would be most plausible with Japan – given that the Trump administration has already put in place a phase one deal with Japan, the United States is about a third of the way to a real free trade agreement with the country. Portman said such an agreement would put the United States in a much stronger position in the Indo-Pacific region and could lead to similar agreements with some of the smaller countries in the region.

Portman also referred to Russia’s blockade of Ukrainian ports, especially Odessa, which did not allow any Ukrainian exports to leave the country by sea. Ukraine is one of the biggest agricultural producers in the world and its inability to ship its produce means that many poor countries, already plagued by food insecurity, will be devastated. Portman called for the opening of a humanitarian corridor to get exports out, saying the United States should play a central role, but that the United Nations and all other countries that believe it is important that these exports continue.

Finally, he spoke about the country’s record gasoline prices, inflation and the importance of sustaining and increasing energy production in North America. With demand for energy soaring, resulting in the highest inflation in forty years, Portman said it was crucial that we tackle the supply side – energy production – in order to fight against soaring inflation and 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 inviting me. It’s always nice to be with you and delve into some of these questions. Regarding the Indo-Pacific economic framework that we talked about earlier, unfortunately, that does not include market access, so it is not a trade agreement per se. If so, it would help in terms of inflation; this would help reduce barriers in the area. This is the next step to take. I’m not saying it’s a bad thing, it’s a good way to put your feet in the water a bit in the Indo-Pacific region. As for China’s tariffs, they were based on a Section 301 investigation, which found that China was unfairly trading these and other products. It’s based on fairness, it’s not based on national security or other things, like section 232. We have to deal with that. On the other hand, I think it’s in our strategic interest to have an exclusion process, where, for example, if you’re an importer of one of these products from China, you face a 25% tariff, you cannot find this product in the United States, which in some cases is. This tariff would no longer apply; in other words, if there is no competition with an American company producing the same product. But where there’s competition, which is most of these cases, and where China isn’t playing by the rules, I don’t think you want to take that tool out of section 301, and the ability to impose tariffs to China to help level the playing field.”

PORTMAN ON MARKET ACCESS POTENTIAL IN AN INDO-PACIFIC TRADE AGREEMENT

“I think what is doable is an agreement with Japan. Remember that under the Trump administration there was a 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 that we are already a third of the way to a real free trade agreement with Japan thanks to this phase one agreement. Japan is by far the largest economy in the former Trans-Pacific Partnership group, with which we have not yet concluded a trade agreement. Most of the countries with which we already have a free trade agreement, you think of Singapore for example or Australia or the South American countries on the Pacific – but we don’t have one with Japan and it’s the biggest saving, it would have the most impact. And politically, I think that’s much more viable is to have 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 to have agreements with some of the smaller countries as well, like Malaysia or Vietnam. So I think that’s the best thing to do. I asked the administration not to go ahead with free trade agreements, as you know. The UK is easy because it’s almost done and started under the Trump administration. But Japan, I think, should be right up there. And if that were done, it would really have a big impact on our economy and our footprint in the Asia-Pacific region.

PORTMAN ON RUSSIAN BLOCKING OF UKRAINIAN EXPORTS

“Well, that would be great. It is a crime, what is happening in Ukraine, on so many levels. The first is that the Russians have effectively made Ukraine landlocked by blockading these Black Sea ports, Odessa being the most important. Remember that some years, Ukraine is the first exporter of sunflowers and sunflower oil, the second in terms of wheat and the countries in particular in development and in Africa and elsewhere depend on it. And yet, because of this war, this totally unprovoked, totally illegal and now brutal war on the part of Russia, these ports are blocked. And besides, they must be blocked from both sides. Basically the Ukrainians lay mines to prevent Russian warships from entering Odessa and then the Russians lay their own we don’t know exactly what that is but mining to prevent the Ukrainians do not use these ports. So yes, it would be great to have what I call a humanitarian corridor there to at least get those grain shipments out. Grain silos in Ukraine are full right now and yet farmers are told to sow, they don’t know where their produce will go. If you told them that the exports can continue, that they can in fact continue to ship these exports, because the trains and the trucks cannot transport almost the quantities, that would make a huge difference. I hope warships would not be needed because I hope Russia will say, ‘Okay, why would we block the flow of grain to Africa and other poor countries’, to prevent starvation to occur? What could happen in the next year if we do nothing. I hope we can open this corridor. The United States should play a central role here, but the United Nations and all the countries in the world that think it is important that these exports continue should do the same.

PORTMAN ON HOW TO FIGHT RISE IN GAS PRICES IN THE UNITED STATES

“Well David, at the moment it’s very clear that we still have demand that exceeds supply and unfortunately the inflation numbers seem to be getting worse in some categories, not getting better. Certainly not better in any way. So the worst inflation in forty years we’ve seen it with gas prices I see projections of six dollars a gallon It’s a huge problem so what should we do on the side Well, number one, we shouldn’t be putting more excess spending or stimulus spending into the economy because that’s what generated a lot of it. dollars – $1.9 trillion – were pumped into the economy in March last year, at a time when the Congressional Budget Office, a nonpartisan group and others all said the economy was doing very well. In fact, it will be back to its pre-COVID levels by the middle of last year, which he did. But yet, the administration insisted on abandoning this huge stimulus. You remember, people like Larry Summers, who was Secretary of the Treasury under President Clinton and the National Economic Council under President Obama, said it would cause inflation and he was right. That’s something we can’t do is put in more stimulus spending, as is being proposed as part of this Build Back Better. Second, don’t raise taxes now, because if you raise corporate taxes, which is also a proposal from the Democrats, you’re going to hurt supply. And third, how are you expanding that offering? Because it is a supply and demand issue and there is no doubt that in addition to the stimulus spending that has been going on there, COVID has resulted in more constrained supply. It’s starting to free up now and that’s good. An easy thing to do, and one that should be done immediately, is to free up more supply on the energy side, because just as inflation is usually defined by too much demand, not enough supply, so does the same applies to gas prices at the pump. So that would mean more oil production here in this country, getting us through this period so that we have the option, and in a more environmentally friendly way, to use our own oil here, rather than import more and try to get those prices down. It’s an inflation problem right now. How do you manage gas prices? And there is a solution, which is to increase the supply, and not just focus, as the Fed must, on the demand side.

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