Biden’s trade policy putting workers first ranks foreign partners

Asian allies like Japan and Australia are increasingly frustrated by Washington’s lack of interest in joining regional trade deals to counter China’s growing influence. The UK and Japan are still awaiting the lifting of Trump-era steel and aluminum tariffs.

At the heart of these conflicts is the influence that progressive Democrats and unions have over Mr Biden, say economists and others. About 56% of unionized households voted for Mr. Biden, according to AP Votecast, which conducts voter surveys, compared to 42% voted for Donald Trump.

Unions tend to favor tariffs on imports and “Buy American” policies that increase domestic production. They also generally oppose trade deals, believing they lead to lower wages and job losses for American workers.

The pursuit of worker-centered politics could come at the expense of establishing a US global trade leadership, said Ed Gresser, former senior policy official in the office of the US trade representative under the Obama administrations, Trump and Biden.

“The administration wants to show the back of America,” said Mr. Gresser, now vice president of the Progressive Policy Institute, a nonprofit think tank. “It will be much more difficult to achieve if what we see is that the United States does not participate in trade policy discussions and remains in a more nationalistic and fearful mode.”

Adam Posen, president of the Peterson Institute for International Economics, a Washington-based pro-trade think tank, said Biden’s trade policy protects traditional manufacturing workers while increasing the costs of imported goods for businesses and consumers. Americans.

Mr Posen says Mr Biden’s policy flatters the “industrial work of white men” and “makes matters worse with allies and makes them dearer to consumers.”

The Biden administration said it has resolved disputes with the European Union and strengthened economic cooperation with “Quad” nations, including Japan, Australia and India.

The policy to prioritize national spending to help workers and communities “in no way prevents us from doing important work of aligning with allies and partners,” a senior administration official said. . “We don’t see a conflict.”

Mr. Biden is keen to gain support from trade allies and other countries in his dealings with China. He criticized Mr. Trump’s trade policy, calling it a one-sided approach that angered longtime trading partners. Mr Biden said he would work to mend those relations and secure the support of allies in his dealings with China.

But Mr. Biden has also angered US trading partners. As part of his now stalled Build Back Better plan, Mr Biden has offered more generous tax credits for electric vehicles built in United Auto Workers’ factories than those made elsewhere.

“The way they worded this incentive really has the potential to become the dominant issue in our bilateral relationship,” Canadian Deputy Prime Minister Chrystia Freeland told reporters last month.

Asian allies are growing impatient with Washington’s lack of firm commitment to regional trade pacts and are seeking US leadership in areas such as digital commerce, which could include new standards for e-commerce and sharing. of data.

“The United States’ security presence has brought stability and peace to the region,” Singapore Deputy Prime Minister Heng Swee Keat said in a speech on November 30. “But for this to continue over the next decades, the United States cannot afford to be absent from the region’s changing economic architecture.”

Beijing is strengthening its commitment to the development of regional trade policies. He recently asked to join the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, the new iteration of a trade deal abandoned by the United States in 2017.

China is also the leader of the Regional Comprehensive Economic Partnership, a new broad, albeit limited, regional trade deal launched in January without the United States.

British and Japanese officials say they are frustrated by slow progress in lifting steel and aluminum tariffs imposed on their products by Mr Trump, who cited national security threats plaguing major industries the United States.

Labor groups, including United Steelworkers, and some lawmakers are supporting tariffs as a way to protect American jobs in a critical industry.

Europe is a bright spot for the Biden administration’s trade relations. U.S. Trade Representative Katherine Tai has quelled a long-standing dispute over commercial aircraft subsidies, lowered tariffs on European steel and aluminum, and established a new framework for discussing emerging technological issues. Resolving disputes over aircraft and metals eliminates billions of dollars in adopted and threatened tariffs and counter-tariffs.

“All of this constitutes a historic year for transatlantic relations,” said Valdis Dombrovskis, executive vice-president of the European Commission, last month.

The administration also orchestrated a global tax deal that replaced the digital services tax threatened by various countries and avoided a new tariff battle with Vietnam. His strong position on forced labor in China and elsewhere enjoys bipartisan support.

USTR spokesman Adam Hodge said allies have also expressed support for a trade policy that emphasizes workers. “We will continue to work with them to create inclusive prosperity for workers in America and around the world. “

Ms. Tai’s office has filed two lawsuits against Mexican manufacturing plants, alleging violation of workers’ rights to organize under the United States-Mexico-Canada Agreement, or USMCA. In both cases, the companies agreed to change their practices to bring themselves into compliance.

The AFL-CIO is satisfied with the trade policy of the Biden administration so far, said Eric Gottwald, union trade policy specialist.

Ms. Tai visited the AFL-CIO headquarters in Washington in June, where she said unionized workers were “the backbone of our economy and our democracy.”

“You are the beacon of trade policy for the Biden-Harris administration,” Ms. Tai said.

Write to Yuka Hayashi at [email protected]