A Democratic Trade Policy Part II
June 8, 2020
Last week I laid out some principles for a Democratic trade policy should former vice president Biden win the election. In short, they were:
- Embrace his internationalism and build on it.
- Remind voters of the damage Trump’s trade policies have caused.
- Support trade negotiations that will more equitably distribute the benefits of trade liberalization.
- Avoid punitive policies and take positive actions that promote workers’ welfare.
This week I want to focus on the immediate challenges Biden will face if he wins, aside from China, which I will tackle China in another column.
World Trade Organization (WTO) Reform. President Trump is clearly not a fan of the organization. He has not—and probably will not—leave it, but he has weakened it when it was already under stress. A new president will arrive just as final preparations for the delayed Ministerial Conference are getting underway. It is a golden opportunity for the United States to reassert the global leadership it has abandoned by working hard for successful outcomes—a fisheries agreement, an e-commerce agreement, reforms that will permit the Appellate Body to resume its work, and resolution of the differences on how developing countries should be treated. That is not very different from the current administration’s agenda, but its bullying tactics and ideological sovereignty-based approach have not gotten very far. A new president committed to a multilateral process will be able to accept the win-win outcomes a successful negotiation requires rather than the win-lose outcomes the Trump administration favors.
Transpacific Partnership (TPP). This initiative was the United States’ best chance to solidify its role in Asia and push forward a rules-based structure that China would ultimately have to join if it did not want to continue losing companies to other countries. Trump pulled out of it his first week in office, which was a huge mistake. Both trade and national security experts agree that it is in our economic and security interest to return. Biden has been lukewarm on that—no surprise given the controversy in his party over it—but he will have to find a way back in if the United States wants to reassert itself in Asia. That will require a time-tested Democratic strategy most recently employed on the United States-Mexico-Canada Agreement (USMCA): declare the existing agreement unsatisfactory, negotiate some minor changes, and declare it fixed.
The European Union. Trade relations with the European Union are fraught right now and not only because of Trump’s policies. Despite more than 30 years of effort, we have not made much progress on a host of irritants in the relationship (remember my many columns on chickens). They envision the WTO as a more activist rulemaking organization than the United States does. They face the same challenges from China that we do but have not been willing to support an expanded definition of “public body” that would allow both of us to respond to Chinese subsidies to their state-owned enterprises. President Trump’s automobile tariff threats—most recently mentioned as retaliation for EU lobster tariffs—have only made the situation worse. A Biden administration will have to exercise adroit diplomacy to rebuild this relationship. There is a positive approach that could find common ground on climate change and a vision of a more activist WTO that could move reform of the Appellate Body forward. At the working level, there has been progress on regulatory convergence that needs to be finalized. Above all is the need to do what Trump has ignored—build a coalition of developed countries to meet the China challenge. That cannot succeed without the European Union, and the time is ripe for it.
Other Pending Trade Negotiations. I learned on the Hill that everything in government takes longer than expected, and trade negotiations are no exception. In addition to China and the European Union, the United States has ongoing talks with Japan, the United Kingdom, Kenya, and Brazil. Despite the current administration’s best efforts, those might not conclude this year. If they do not, a Biden administration should wrap them up and move on to its own priorities. Brazil is not popular right now among Democrats, but we are essentially making an agreement between our economies, not just with their president. He won’t last forever, and it is an important economy we should be working hard to access. The others are less controversial, but that does not make them easier to conclude. The United Kingdom, in particular, will have to make some difficult choices on adopting EU or U.S. regulatory policies. There are not likely to be big differences between Trump and Biden on the objectives for these talks, so the latter’s goal should simply be to conclude them on the best terms possible and not make the common mistake of new administrations—assuming that everything your predecessor did was bad..
The U.S. relationship with China eclipses all these talks and deserves a column of its own. In addition, a Biden administration will need to go beyond principles and cleaning up and articulate its own vision of what it wants to accomplish, with some specific examples. So, stay tuned for further thoughts.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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