Potemkin Agreements

You are, I presume, all familiar with “Potemkin villages”—the fake structures that Grigory Potemkin, Catherine the Great’s former lover and then-governor of newly-acquired Crimea, allegedly created along the Dnipro River to make the Empress believe more was going on than what was really happening during her six-month trip south. Most historians say either that this never happened or that the point was to show Catherine what the region would look like in the future and that she was aware of the plan. So, the myth may have conquered truth, but it left us with a tidy metaphor for fake structures or events that hide the truth.

This may turn out to be an apt metaphor for the proliferation of cooperation agreements and committee structures that have become the core of U.S. trade policy during the Biden administration. Here are some examples, in no particular order.

• The U.S.-India leadership on a global Digital Public Infrastructure (DPI) implementation
• The Minerals Security Partnership (MSP), which includes Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom, the United States, and the European Commission
• The U.S.-EU Trade and Technology Council (TTC), which includes 5 cochairs, 10 working groups and a Growth Task Force
• The Indo-Pacific Economic Framework (IPEF), which so far has agreed on the supply chain pillar that includes three committees—the Supply Chain Council, the Supply Chain Crisis Response Network, and the Labor Rights Advisory Board
• The Atlantic Declaration Action Plan (ADAPT) for a twenty-first century U.S.-UK economic partnership, which includes five pillars and presumably yet-to-be-agreed-upon committees
• The U.S.-Japan Critical Minerals Agreement (CMA)
• The U.S.-Ecuador Fair Trade Working Group
• The U.S.-Kenya Strategic Trade and Investment Partnership (STIP)
• The Clean Energy Ministerial Industrial Deep Decarbonization Initiative (IDDI), coled by the United Kingdom and India and includes the United States as a member

An outlier is the Americas Partnership for Economic Prosperity (APEP), which has four pillars but has yet to agree to anything.

The Potemkin metaphor becomes apt when one examines what these entities have actually accomplished. The answer, so far, appears to be almost nothing. To be fair, some of them, like the U.S.-India DPI and the U.S.-Japan CMA, are new, and it is too soon to expect results. The list is also not entirely devoid of accomplishments. The most significant is no doubt the work of the TTC in producing an agreement between the United States and the European Union on sanctions and export controls on Russia in the wake of its invasion of Ukraine. On the whole, however, what is mostly seen are words, particularly cooperation, coordination, partnership, information sharing, resilience, inclusivity, technical assistance, and capacity building.

Make no mistake. These are good words, and they embody good concepts, but so far, they are just words. Will the IPEF supply chain pillar produce actual information sharing and then cooperation when the inevitable next crisis rolls along? Will ADAPT with the United Kingdom actually lead to something? Will the MSP lead to meaningful sharing among the parties? Time will tell, and the administration is running out of it.

At one level, that is more of a political problem than an economic one. Almost any economic initiative takes a while to get off the ground, and one result is that credit and blame may be misaligned. A good example was the 1992 presidential election, where Bill Clinton ran against the recession. You oldsters will remember, “It’s the economy, stupid!” as the campaign’s slogan. In truth, the recession was technically over before the election, but Clinton won and reaped the credit for a reviving economy that began before he won. (He is due other credit, however, as his later management of the economy produced healthy growth, government surpluses for the first time in decades, and debt reduction.) In contrast, it appears President Biden is getting the blame for events that began before his administration (but got worse during it), despite what appears to be so far successful efforts to tame inflation without falling into recession. The point is, if these various agreements and committees are good things, it would be good for the president if they produce some concrete results before the 2024 election.

Unfortunately, that is unlikely for two reasons. First, the election season is quickly approaching, which means good policy gets shoved onto the back burner in favor of hotter campaign rhetoric, which often is more focused on casting blame on the other side than on advocating good policy. Second, it is an open question whether these efforts will produce anything concrete anyway. For the most part, the administration has eschewed the concept of tangible benefits in its trade policy through its decisions not to negotiate on market access and not to submit the agreements to Congress for approval. The result is likely to be agreements that are broad but shallow with few meaningful commitments by any of the parties.

Of course, any agreements will be labeled tremendous successes. When was the last time any administration admitted something it did was inconsequential? And, of course, it is always possible that these initiatives on cooperation, coordination, resilience, and so forth will produce some tangible outcomes. But at this stage, with only about 18 months left in the president’s term, it appears they are Potemkin agreements—the façade is pretty, but there is nothing behind them.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.