BY YUKA HAYASHI | UPDATED DECEMBER 28, 2021 1:36 PM EST
At the heart of the disputes is the grip of progressive Democrats and unions on the president, economists and others say
WASHINGTON — President Biden’s goal of mending frayed relations with European and Asian trading partners clashes with his other priority of putting American workers first.
What the White House calls its “worker-centric” trade policy has led to clashes with Mexico and Canada, which have opposed the administration’s plan to give higher tax credits to electric vehicles built by American union workers.
Asian allies like Japan and Australia are increasingly frustrated with 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 those disputes is the stranglehold of progressive Democrats and labor unions on Mr. Biden, economists and others say. About 56% of unionized households voted for Mr. Biden, according to AP Votecast, which conducts voter surveys, compared to 42% who voted for Donald Trump.
Unions tend to favor import tariffs 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.
Pursuing worker-centered politics could come at the expense of establishing America’s global trade leadership, said Ed Gresser, a former senior policy official in the office of the U.S. Trade Representative during the Obama, Trump and Biden.
“The administration wants to show America’s back,” said Mr. Gresser, now vice president of the Progressive Policy Institute, a nonprofit think tank. “It will be much more difficult to achieve this if what we see is the United States not participating in trade policy discussions and remaining in a more nationalistic and fearful mode.
Adam Posen, president of the Peterson Institute for International Economics, a pro-trade think tank in Washington, said Mr Biden’s trade policy protects workers in traditional manufacturing while raising the costs of imported goods for businesses and American consumers.
Mr Posen says Mr Biden’s policies pander to “industrial white male labor” and “make things worse with allies and more expensive for consumers”.
The Biden administration says it has resolved differences with the European Union and strengthened economic cooperation with “Quad” nations, including Japan, Australia and India.
The policy of prioritizing domestic spending to help workers and communities “in no way prevents us from doing the important work of aligning with allies and partners,” a senior administration official said. . “We don’t see any conflict.”
Mr. Biden wants to enlist the support of trade allies and other countries in his dealings with China. He criticized Mr Trump’s trade policy, calling it a one-sided approach that has angered longtime trading partners. Mr. Biden said he would work to mend those relationships and gain the support of allies in his dealings with China.
But Mr. Biden has also angered U.S. trading partners. As part of his now stalled Build Back Better plan, Mr Biden has proposed more generous tax credits for electric vehicles built in United Auto Workers union factories than those made elsewhere.
“The way they’ve phrased this incitement has really, really the potential to become the overriding issue in our bilateral relationship,” Canada’s Deputy Prime Minister Chrystia Freeland told reporters last month.
Asian allies are growing increasingly impatient with Washington’s lack of firm commitment to regional trade pacts and are seeking US leadership in areas such as digital trade, which could include new standards for e-commerce and data sharing.
“The security presence of the United States has brought stability and peace to the region,” Singapore’s Deputy Prime Minister Heng Swee Keat said in a November 30 speech. “But for this to continue in the coming decades, the United States cannot afford to be absent. of the region’s evolving economic architecture.
Beijing is strengthening its involvement in the development of regional trade policies. He recently applied to join the Comprehensive and Progressive Agreement for 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 broad, albeit limited, new regional trade deal launched in January without the United States.
British and Japanese officials say they are frustrated with the slow progress in lifting steel and aluminum tariffs imposed on their products by Mr Trump, who cited national security threats undermining important American industries.
Labor groups, including United Steelworkers, and some lawmakers are backing the 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 eased a long-running dispute over commercial jet subsidies, lowered tariffs on European steel and aluminum, and set up a new framework to discuss emerging technology issues . Dispute resolution over aircraft and metals eliminates billions of dollars in enacted and threatened tariffs and counter-tariffs.
“All of this constitutes a pivotal year for transatlantic relations,” Valdis Dombrovskis, executive vice-president of the European Commission, said last month.
The administration also orchestrated a global tax deal that replaced the digital services tax threatened by various countries and averted another tariff battle with Vietnam. His tough stance on forced labor in China and elsewhere enjoys bipartisan support.
USTR spokesman Adam Hodge said allies also voiced support for a trade policy that puts the focus on workers. “We will continue to work with them to create inclusive prosperity for working people in America and around the world.”
Ms. Tai’s office has filed two lawsuits against Mexican manufacturing plants alleging violation of workers’ rights to unionize under the United States-Mexico-Canada Agreement, or USMCA. In both cases, the companies agreed to change their practices to comply.
The AFL-CIO is happy with the Biden administration’s trade policy so far, said Eric Gottwald, the union’s trade policy specialist.
Ms. Tai visited the AFL-CIO headquarters in Washington in June, where she said unionized workers are “the backbone of our economy and our democracy.”
“You are the trade policy beacon of the Biden-Harris administration,” Ms. Tai said.
