This commentary is part of CSIS’s Global Forecast 2021 essay series.
International economics is one area of U.S. policy where there will be a clear break between the Trump and Biden eras. Whether it’s less obsession with bilateral trade deficits and tariffs, more commitment to multilateral problem-solving, or a more disciplined policymaking process, the Biden administration’s approach will be markedly different from that of its predecessor. But there are three aspects of international economic policy in which President Biden's impulses appear to pull in conflicting directions. Unless these tensions are reconciled, there is a risk that this important area of policy will get bogged down in the new administration.
The first tension is between domestic and international economic priorities. In his campaign statements, personnel appointments, and early legislative proposals, President Biden has made clear that rebuilding at home is priority number one for his administration—understandably so, given the multi-headed hydra of crises he faces: the Covid-19 pandemic, economic dislocation, racial injustice, and incendiary political divisions. At the same time, the new president has said he is going to waste no time reinvigorating U.S. alliances and reengaging in multilateral institutions and endeavors.
These priorities are not necessarily in conflict. Indeed, the Biden team has coined the phrase “foreign policy for the middle class” precisely to emphasize that the new administration’s international engagement, economic and otherwise, will be in service of domestic rebuilding—specifically, improving the lot of the American worker. But there is devil in the detail here that needs to be worked out.
A president’s time and capital are limited, and domestic and international priorities could crowd each other out in practice. Events on the global stage—whether those already on the calendar such as international summits or sudden crises (a dangerous debt overhang in low- and middle-income countries is one looming risk at present)—have a way of distracting from domestic policy work. More substantively, some of the elements of the “Build Back Better” plan could be in conflict with Biden’s international priorities. For example, will the pledge to “buy American” work against the effort to rebuild ties with U.S. allies, who are likely to want a fair share of new investments in infrastructure and innovation?
Reconciling these conflicting priorities will require the Biden White House to impose strict process discipline to ensure that different strands of policymaking work in concert. This is even more important in light of the plethora of senior officials named to key White House posts, whose policy agendas—and egos—could come into conflict. An important bureaucratic step would be to vest the international economic coordination function in a strong White House deputy who reports to both Jake Sullivan, national security adviser, and Brian Deese, director of the National Economic Council. Keeping allies apprised of—and, where appropriate, involved in—domestic rebuilding plans would also be useful.
The second tension in Biden international economic policy is between the new administration’s aversion to traditional trade negotiations and its desire to reestablish U.S. leadership in the Indo-Pacific region. As a candidate and president-elect, Biden and his team have poured cold water on the idea of an early move by the new administration to negotiate trade agreements. Specifically, they have signaled a lack of interest in rejoining the Trans-Pacific Partnership (TPP), the megaregional trade agreement with 11 U.S. allies and partners negotiated by the Obama administration but abandoned by Donald Trump.
Virtually all Asia policy experts in Washington agree that an effective U.S. strategy in the Indo-Pacific must include a credible economic and trade policy. Allies and partners in the region welcome the U.S. security presence as a stabilizing force, but they also want Washington to be an active participant in efforts to promote regional economic integration. If the United States is not going to rejoin TPP, allies and partners will expect Washington to offer a compelling alternative economic strategy for the region.
Pressure on the Biden administration to articulate such a strategy will build as the series of annual summits in Asia approaches in the fall of 2021. President Biden—who may not be as allergic to rejoining TPP as his own advisers—could square the circle at the annual Asia-Pacific Economic Cooperation (APEC) summit in November by signaling a long-term U.S. interest in rejoining TPP on suitable terms while proposing that willing partners in the region begin by building out rules and norms in key areas. One such area is the digital economy, where there is a pressing need for common rules on data and e-commerce; Biden could propose pulling together existing work on these issues in APEC, TPP, and the U.S.-Japan Digital Trade Agreement into a comprehensive digital agreement for the region. Rulemaking on state-owned enterprises and good regulatory practices are other promising targets for regional negotiation.
The third tension is between confronting and engaging with China. President Biden has made clear that he shares the Trump administration’s assessment of China as a strategic competitor of the United States. Top advisers such as Jake Sullivan and Indo-Pacific coordinator Kurt Campbell have no illusions about the challenge Beijing poses to U.S. interests in the Indo-Pacific and beyond. The Biden administration is likely to maintain policies that promote selective decoupling of the two economies—especially in technology—while taking a harder line than its predecessor on Beijing’s suppression of human rights and democracy in Xinjiang, Hong Kong, and elsewhere.
At the same time, the Biden administration will also feel compelled to engage with Beijing to address global challenges where China is part of the problem or the solution, or both. These include pandemics, climate change, and nuclear proliferation. To address these issues, the Biden team will want to reestablish diplomatic channels of communication with Beijing that were effectively cut off during the Trump administration.
The worry is that the impulses to confront and engage Beijing will eventually come into conflict, undermining both lines of effort. One specific concern that has been much discussed in Washington is that John Kerry, in his role as special presidential envoy on climate change, may offer Beijing concessions on trade or human rights in order to secure its cooperation on climate issues. Others respond that this concern is misplaced, assuming the Biden team remains clear-eyed about U.S. interests and values when engaging with China.
A number of steps would help ensure that the Biden administration effectively balances both the competitive and cooperative sides of the China relationship. One is to elicit Beijing’s cooperation on issues like global health and climate through multilateral organizations such as the World Health Organization and the Group of 20 while using bilateral channels to hold Beijing’s feet to the fire on trade, economic coercion, and human rights—and showing a willingness to use real leverage to pressure Beijing on these issues.
To manage this tricky balancing act, the Biden administration should consider reestablishing the informal, high-level channel between senior foreign policy and economic officials in the White House and Zhongnanhai used occasionally during the Obama administration. Today an equivalent group would include, on the U.S. side, Jake Sullivan, Kurt Campbell, and Brian Deese and, on the Chinese side, Yang Jiechi and Liu He, Xi Jinping’s top foreign policy and economic advisers, respectively.
With strategic perspective and process discipline, the Biden administration should be able to reconcile the three tensions identified here. Without them, there is a risk that international economic policy gets hamstrung by internal contradictions.
Matthew P. Goodman is senior vice president for economics and holds the Simon Chair in Political Economy at the Center for Strategic and International Studies (CSIS).
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).
© 2021 by the Center for Strategic and International Studies. All rights reserved.
