Reconciling the rhetoric and reality of Biden’s trade policy

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Author: Shihoko Goto, Wilson Center

Even as the Biden administration continues to boast about cooperating with its allies to ensure stability in the Indo-Pacific, the United States is unlikely to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) anytime soon. .

With little appetite in Congress for the United States to sign new trade deals, US economic strategy in the region will focus on tackling Chinese challenges – efforts alongside like-minded countries that Washington will continue to lead. . But this strategy might be less effective when new trade and investment partnerships are negotiated without the involvement of the United States.

The first major hurdle to overcome to pave the way for potential U.S. membership in the CPTPP will be the re-authorization of the Trade Promotion Authority (TPA), which expires on July 1, 2021. The TPA allows the White House to submit a trade deal for a pro or con vote in Congress with no amendments being made and is an essential tool for negotiating new trade deals. Without it, reaching an agreement as broad and ambitious as the CPTPP would be extremely difficult and take too long.

Even if a revised TPA were to be legislated in a timely manner, it still leaves the challenge of dealing with Congress’ paltry appetite on both sides of the political aisle to sign a mega trade deal. It is hardly surprising that the latest annual trade policy agenda prepared by US Trade Representative Katherine Tai indicates that the Biden administration will pursue a voter-driven trade agenda that “will encourage investment and innovation. national governments and increase the economic security of American families, including by combating the unfair trade practices of our trading partners ”.

The emphasis on domestic growth is reminiscent of the goals pursued by the Trump administration. Although former US President Trump’s singular emphasis on reducing the US trade deficit with China has come under heavy criticism, his questioning of the economic gains to be made by trade deals for the United States. The average American has been reluctantly recognized by even those who have staunchly opposed the United States’ withdrawal from the Trans-Pacific Partnership (TPP).

In fact, when it comes to trade with Asia, the Biden administration has yet to revise Section 232 which allowed the Trump administration to impose tariffs on steel and steel. aluminum in the name of national security to some of Washington’s most important allies, including Japan. Those tariffs remain in place despite more than 300 U.S. companies pushing the Biden administration to end them immediately.

Certainly, American manufacturers are calling for the lifting of these tariffs not for foreign policy purposes, but rather to remain competitive and be able to obtain supplies beyond American borders without paying a penalty. Yet US allies are bewildered by Biden’s cooperative rhetoric that does not align with US actions on economic policy. The Biden administration’s massive infrastructure spending and economic revitalization proposals have been viewed with caution in Tokyo, Seoul and elsewhere.

Aside from the White House’s arduous task of securing Congressional approval for packages totaling $ 6 trillion, growing unease remains over whether the Biden administration’s rhetoric to work with its allies is will really extend to the economic front.

Yet the United States cannot meet China’s challenge without relying on like-minded nations. Beijing is already guarding against US measures that could isolate it from the global economy thanks to its dual circulation strategy. In doing so, China is moving forward with plans to reduce its dependence on foreign markets and technology, while simultaneously increasing the dependence of emerging markets on products and knowledge. -make Chinese. Coupled with the Belt and Road initiative, Beijing’s goal is to build a new order centered on China, especially economically.

Even if the United States is not joining any comprehensive trade deal anytime soon, it is imperative that Washington demonstrate its willingness to work with like-minded partners for political as well as economic considerations.

For example, a bilateral investment treaty with Taiwan would be a huge victory for Taipei given the concessions Taiwan has already made to import American beef and pork. For Washington, this would bolster Taiwanese voters’ support for the United States in the face of ever-increasing pressure from Beijing. At the same time, it would also strengthen a trade relationship on which the United States remains heavily dependent for the most advanced semiconductors.

It would be equally effective for the Biden administration to sign new developing economic partnerships that aim to address both the challenges of post-COVID-19 growth and the challenge of China. The Trilateral Supply Chain Resilience Initiative is one such opportunity, which would allow the United States to cooperate with Australia, Japan and India in their efforts to reduce over-reliance on chains. sourcing based in China.

Even though the Biden administration will be constrained by its domestic considerations and unable to strike new trade deals anytime soon, that shouldn’t prevent it from aligning its policies to comply with its rallying cry for cooperation. The call to work with partners on the economic front is hardly altruistic. The United States alone cannot push back China’s broader regional ambitions without collective action. Washington’s mere focus on its narrowly defined domestic growth considerations could mean that its call for cooperation will simply be dismissed as a hollow word.

Shihoko Goto is Deputy Director of Geoeconomics and Senior Associate for Northeast Asia in the Asia Program at the Wilson Center.


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