Small Ball

(Warning: This column contains enough clichés to meet your needs for the next month.)

So far, the Biden administration seems to be pursuing the “go big or go home” strategy on many fronts, notably the Covid relief bill and now the infrastructure proposal with its very broad concept of what infrastructure means. The president has a lot of experience in public policy and knows that the first two years of a presidential term are the best time to accomplish something. That is particularly true right now. With party margins so narrow, the 2022 elections could produce changes in control of both bodies, which would bring much of Biden’s agenda to a halt. He may also be a believer in the “best defense is a good offense” strategy—accomplishing as much as you can right away in order to make a convincing case to the voters that your party should retain power.

One area where the president appears to be playing small ball, however, is trade. While promising major policy change—a trade policy that works for everybody, not just the big corporations—he has so far put very little meat on those bones, taken few actions to address current issues, and, most importantly, is ignoring half of the trade equation.

So far, the administration’s rhetoric has focused on making sure that the benefits of trade accrue to workers. As I said previously, they are right to point out that the United States has not done a very good job of that. It turns out a rising tide doesn’t lift all boats. The owners’ yachts float free, while the workers’ boats remain stuck in the mud. We need to fix that, but it is only half the problem, because it focuses on distributing the benefits of trade and not on creating them, which is the real objective of trade agreements. If we are not creating new benefits—new economic growth—we have nothing new to distribute, and workers are not going to be better off.

Redirecting existing trade benefits from company A to worker B may be good for B, but it doesn’t do much for growth. If the total pie is not getting bigger, we are just rearranging the deck chairs. President Biden and Ambassador Tai are rightly critical of past trade policy for focusing on growth and not distribution, but they now run the risk of veering to the opposite extreme of focusing on distribution and ignoring opportunities for growth as well as opportunities to further their own policies.

For example, trade agreements being negotiated with the United Kingdom and Kenya are relatively low-hanging fruit that would contribute, albeit modestly, to growth. In addition, they would give the administration the opportunity to expand to other countries the policies on labor and environment it has bragged about in the United States-Mexico-Canada Agreement. Saying our agreements need to do better in those areas is a bit hollow if you are not actually doing anything to improve our agreements. Likewise, concluding the Environmental Goods Agreement, the proposed agreement on fisheries subsidies, and the long-stalled Trade in Services Agreement would give the United States opportunities to advance its environmental goals and promote progressive trade principles. In other words, we can’t win if we’re not playing the game.

So far, the administration has passed up opportunities to move forward on all of those except fisheries, where it has been forward-leaning. In addition, it is not doing anything to renew trade promotion authority, which expires on June 30, or even trade adjustment assistance, most of which expires on the same date and which is an important program for workers. The administration will come around eventually, particularly on the latter, but these bills have a long lead time and are difficult to pass because so many members of Congress have extra baggage they want to put on board the train as it leaves the station. If the administration wanted them seamlessly extended, it should have started in February. Now there will almost certainly be a gap.

There has been some good news—support for Ngozi Okonjo-Iweala as the new WTO director-general, withdrawal of the Trump proposal to remove some medical-related items from our list of obligations in the Government Procurement Agreement, and, so far at least, resistance to India and South Africa’s demands for waiving intellectual property rules for vaccines—but the missed opportunities loom larger.

This may be politics. Trade has been historically controversial with Democrats, and, thanks to former president Trump, Republicans are moving in an anti-trade direction. Public opinion, however, remains supportive of trade, particularly among Gen Zers and millennials—the voters the president should be listening to. A more positive trade policy will also appeal to the business community, which is losing its longtime infatuation with the Republican party. So, both politics and logic argue for a trade policy that both creates growth and ensures it is fairly distributed. Time to put small ball behind us and return to the big leagues. 

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

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

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