U.S. Treasury pick Yellen says domestic investment needed before new trade deals

WASHINGTON (Reuters) - Janet Yellen, U.S. President Joe Biden's nominee for Treasury Secretary, underscored the new administration's intention to focus on domestic investments in workers and infrastructure before embarking on any new free trade agreements.

Yellen, whose nomination will be considered by the Senate Finance Committee at 10 a.m. EST (1500 GMT) on Friday, also vowed to work more closely with allies to put pressure on China.

Asked by committee members if the Biden administration would prioritize a trade deal with Taiwan, Yellen replied: "President Biden has been clear that he will not sign any new free trade agreements before the U.S. makes major investments in American workers and our infrastructure. Our economic recovery at home must be our top priority."

At the same time, she said the new administration planned to pursue "a robust trade agenda" and she would work closely with Biden to "reach out to our allies, rebuild bridges and pursue trade agreements that support American prosperity and put workers first," according to a copy of her written responses to queries by lawmakers following her confirmation hearing on Tuesday.

Among other steps, the Biden administration would carry out a comprehensive review of all aspects of former President Donald Trump's trade policies toward China, including how completely Beijing had lived up to the terms of the Phase 1 trade agreement signed in January 2020, Yellen said in the document seen by Reuters.

"As part of his review, he is going to consult with allies to galvanize collective pressure. We need an approach that actually brings meaningful pressure on China," she wrote.

Asked about whether Biden's proposed increase in the corporate tax rate would harm the competitiveness of U.S. companies, particularly with regard to China, Yellen said any increase in the corporate tax rate would be coupled with "massive investment" that would benefit U.S. businesses.

She noted that Biden's proposal to increase the corporate tax rate to 28% - the midpoint of the pre-2017 level and the rate imposed after Trump's tax cut - would still leave it "substantially below the level that had been in place for decades."

(Reporting by Andrea Shalal and David Lawder; Editing by Andrea Ricci)

01/21/2021 19:59

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