With the advent of Biden’s administration, a new approach in international relations and in particular, a shift in the US trade policy has been put in place. This is not surprising, considering that economic recovery and trade policy affairs were at the core of the public debate during the 2020 presidential campaign. On March 1 of 2021, the United States Trade Representative (USTR) office published the “2021 Trade Policy Agenda”, a six-page document that summarizes the top priorities of President Biden. However, this document does not provide a detailed work plan or key actions to achieve those objectives.
During his first days of mandate, the President showed some signs on how his trade agenda would look like in the upcoming years. A notable example is the appointment of Katherine Tai, an expert attorney specialized in the US-China trade relationship, as the US Trade Representative. Likewise, the enactment of the “100-Day Supply Chain Review” executive order, under which the Federal Agencies must report any risk in the supply chain of some critical products, as well as, the US rejoin to the Paris Agreement revealed the trade and foreign policy priorities of this administration.
This article seeks to explore Biden's trade road map and its impact in the international arena. With that purpose, the analysis will first give a brief overview of the trade atmosphere left-off by former President Trump, to subsequently examine some of the priorities outlined in the 2021 Biden’s Trade Policy Agenda.
Trump’s trade policy landscape
During the last four years (2016-2020), Donald Trump promoted numerous measures aiming at “breaking down unfair trade practices in other markets” and “achieving reciprocity with trading partners” according to the Trade Policy Agenda published by the USTR. Nonetheless, such objectives were frequently fostered through unilateral or bilateral means but not multilateral, which is problematic considering the US influence in the multilateral trading system and its binding commitments.
Specifically, two unilateral measures implemented by Donald Trump called the attention of the international community. On the one hand, under the “National Security Strategy” and relying on the rarely used 232 Section of the Trade Expansion Act, in 2018 the Trump administration imposed increased tariffs on Chinese products (25% tariffs on imports of steel and 10% tariffs on imports of aluminum), as mean to protect critical industries and address the trade deficit. On the other hand, the Trump administration signed a memorandum under Section 301 declaring that China’s practices on Intellectual Property rights and transfer of technology standards constitute an unreasonable burden over the US industry. This resulted in the so-called “trade-war” against China, under which China responded with a tariff retaliation on US products and initiated consultations in the framework of the World Trade Organization (WTO) Dispute Settlement, a mechanism that allows WTO members to challenge the measures implemented by another party that contravenes the obligations embodied in the WTO Agreements.
As regards to Trade Agreements, the Trump administration has been known for two main measures, namely: the negotiation of the United States Mexico Canada Agreement (USMCA) and the US withdrawal from the Trans-Pacific Partnership (TPP) in 2016. Under the Trump leadership, the U.S negotiated and concluded an updated version of the North American Free Trade Agreement (NAFTA) in force since 1994, now referred to as USMCA. Among the significant USMCA innovations, it stands out the inclusion of stricter provisions on labor protection standards, a new section to address the challenges arising from digital trade, the modernization of the Intellectual Property chapter and a revised dispute settlement mechanism.
On the other hand, Trump has been credited for the US withdrawal from the TPP, a landmark regional trade agreement covering a combined population of 810 million consumers and concluded during the Obama administration as a way to strengthen the US leadership in Asia. Such a step in Trump's trade agenda undermined the US relation with some key players such as Japan and South Korea, with whom he sought a re-negotiation of the existing Free Trade Agreements without success.
With respect to the WTO and its dispute settlement procedure, the Trump administration blocked the WTO appeals mechanism by impeding the selection process to fill the bench of the Appellate Body (AB) members. Hence, by December 10 of 2019, the AB became a non-operational organ of the WTO structure. This announcement responds to the ever-lasting debate and criticism made by the US government, specifically since the Obama administration, to the structure, legal framework and dispute settlement mechanism of the WTO.
Thus far, the measures introduced by former President Trump during his mandate are known for:
i) Be oriented towards China;
ii) Be executed by unilateral powers;
iii) Ignore the commitments undertaken under the multilateral level.
The question that remains is whether Biden’s trade policy agenda intends to return to a “pre-Trump” trade environment or whether it will propose a new approach.
Understanding Biden’s trade policy agenda
A close look to the “2021 Trade Policy Agenda” published by the United States Trade Representative, as well as to the “2020 Annual Report to Congress”, allows us to anticipate the work plan that this administration will follow in terms of international relations and trade policy. From an initial review of the document published, four main areas of focus are identified: Economy recovering from Covid-19 pandemic, tackling China’s “unfair economic practices”, restoring partnerships and alliances, and the enforcement of work and environment obligations. Further, it must be taken into account that a Democratic majority in the Congress might have a significant impact in the execution of those objectives.
As to the US-China relationship, a radical shift in the US behavior should not be expected. In fact, President Biden made clear the need to fight against the unfair practices of China as they represent a “critical pillar in building the economy back better”. Nevertheless, the first challenge that must be addressed is the implementation and future of the phase-one Economic and Trade Agreement concluded with China under the Trump administration as a sign of de-escalation of the US-China Trade war. Even though this agreement is supposed to have additional phases that require numerous rounds of negotiation on structural trade related issues, the document published did not mention further steps or priorities on the negotiation process. Here, Biden is expected to continue with Trump’s policies, meaning a constant monitoring, enforcement and challenge over China’s practices in terms of economy, trade, human rights among other issues.
Another area of focus is the enforcement of labor protection and environmental standards through different means, specifically the strategic use of dispute settlement procedures and the committees in charge of monitoring FTA’s implementation. In particular, the USTR nominee Katherine Tai mentioned that ensuring the enforcement of the labor and environmental rights chapter of the USMCA is a core element of this administration. On the same note, Biden will continue implementing the law banning the import of goods made with forced labor through concrete actions to be executed by the US Customs and Border Protection Authority.The efforts being made in the enforcement of the current legal framework and concluded trade agreements could imply that the new administration might not be interested in negotiating new obligations, despite the ongoing talks with the United Kingdom on a new trade deal or the possibility to rejoin the TPP.
Likewise, the Biden administration will likely seek cooperation and coalition from strategic allies in different regions in order to coordinate a joint plan to pressure China’s practices. In particular, Biden promised to attempt discussions with actors such as the European Union (EU) or major actors of the Indo-Pacific region such as Japan or South Korea. However, the US-EU approach can be hindered by the existing US-EU conflict over the Boeing-Airbus government subsidies, the imposed tariffs on European steel and aluminum by the US or the recently concluded Comprehensive Agreement on Investment (CAI) between the EU and China.
It is expected from the Biden presidency to prioritize the multilateral trading agenda, by sticking to the rules and constructively participating in the negotiation rounds of different issues including the WTO Reform and digital trade. Although Biden started this process by clearing the way for the election of the new WTO Director General, Ngozi Okonjo-Iweala, first African woman to lead the institution, it is very likely that the WTO dispute settlement will remain paralyzed until the systemic criticisms are not addressed in detail by the WTO membership.
Conclusion
To date, the Biden administration has not revealed a dramatic change, but rather a new approach in his trade policy agenda compared to Trump’s. He most likely will not come back to the “pre-Trump” pro-globalization status. However, he might reshape the international arena by seeking key allies to face China’s growing influence as a major economic and political actor. Furthermore, the international community is expecting the President’s decision-making process to be more predictable and not made through social media. Joe Biden still remains silent regarding many aspects of his international trade strategy. Therefore, the management of the WTO dispute settlement blockage, a potential UK-US deal, the US-China phase- two deal negotiations, among other issues, will allow us to better understand the dynamics of the US approach towards international trade.
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Disclaimer: The views expressed in this article are solely those of the author.
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