Trade was not a key subject in the debates. So what do we expect of Biden?
Biden's Agenda
The Steptoe & Johnson law firm issued a Client Advisory on US Trade Agenda in the Biden Administration.
- Free Trade Agreements. One of the few specific statements on trade policy that then-candidate Biden made during the campaign is that he does not intend to pursue free trade agreements (FTAs) until significant domestic investments have been made in the areas of healthcare, infrastructure, and education, among others.
- Trade Promotion Authority: Trade promotion authority (TPA), is currently set to expire on July 1, 2021. TPA, also known as “fast track” authority, restricts Congress’s ability to amend covered trade agreements by requiring an up-or-down vote, assuming that the President follows a prescribed set of formalities during the negotiation process. Congressional Democrats will press for greater recognition of social and environmental issues in the context of FTA negotiations, with an emphasis on achieving climate change goals and obtaining stronger worker protections.
- Trade Impacts of Domestic Investment/Reshoring: On the issue of domestic investment, the Biden Administration seems likely to prioritize the reshoring of US manufacturing, Buy American programs, and policies to strengthen US supply chains in areas that are critical to US competitiveness.
- The US-China Relationship: Over the past two and a half years, the Trump Administration unleashed a variety of new measures aimed at reshaping trade between the United States and China, most notably, the imposition of tariffs on nearly $370 billion in Chinese imports as a result of a Section 301 investigation into China’s intellectual property and investment practices. While President Elect Biden has not yet signaled what he intends to do with these tariffs, it is unlikely that the Biden Administration will simply remove them outright without seeking some kind of concession (trade-related or otherwise) from China in return. President Elect Biden will also inherit a number of other China policy challenges with trade and supply chain implications, including US concerns about state-supported competitors in the high-tech sector and imports produced with forced labor in Xinjiang. On these and other related areas, the Biden Administration will likely face bipartisan pressure from Congress to take decisive action.
- Bilateral Trade Relationships: While the substance of the Biden Administration’s stance toward China may not change significantly, its strategy is expected to differ. Whereas the Trump Administration adopted a series of unilateral actions against China, President Elect Biden will likely adopt a multilateral approach to addressing trade issues. This is in part a reflection of the President Elect’s more globalist approach, developed from his leadership of the Senate Foreign Relations Committee and his foreign affairs portfolio in the Obama Administration. This means that any further US negotiation with China on a “Phase Two” agreement addressing more systemic issues of concern to the United States will likely be shelved in favor of a multilateral approach.
- WTO Reform: The Biden Administration will also need to consider multilateral action with respect to the World Trade Organization (WTO). At least in the near term, it is unlikely that the Biden Administration will adopt a significantly different approach from that of the Trump Administration.
What Changed?
1: Free Trade Deals: Biden will not be in a rush for new deals. Trump wanted deals but was so confrontational he delivered nothing. No Change
2: Trade Promotion Authority: Trump did use Trade Promotion Authority to replace NAFTA with USMCA, but that switch accomplished nothing. Effectively No Change
3: Domestic Reshoring: Biden will promote made in USA. So did Trump. Manufacturing did not flood back under Trump and won't under Biden either. No Change
4: China: Trump sought concessions from China and never got them. Biden will attempt to do better. But if he is hamstrung by climate change demands and worker rights issues he is unlikely to get very far. And in the absence of Trade Promotion Authority Biden will have a tough time threading a needle between demands of the Greens and demands of the Republicans. Change Remains to be Seen
5: Bilateral Trade Relationships: Biden will drop one-on-one confrontations with a multilateral approach. To the extent he needs cooperation from the EU, well that bickering could last years. Change in Style, Substance Remains to be Seen
6: WTO Reform: Steptoe says it is unlikely that the Biden Administration will adopt a significantly different approach from that of the Trump Administration.
I disagree. Trump paralyzed the WTO by blocking appointments to the seven-person panel for more than two years.
Bloomberg notes the WTO has been unable to issue judgments on new cases since December 2019 because there aren’t enough active members. Trump’s complaint is that the WTO evolved into a legal tool for nations to exert pressure on the U.S., and his top trade official called it a “litigation-centered organization.”
China desperately needs to stay in the WTO system.
Trump made it easy for China because no one wanted to go along with Trump's self-serving demands. Then rulings stopped altogether.
Biden will make appointments and seek cooperation. That's different.
If the US can get the multinational cooperation it needs, it may be able to force China to make changes. That is a big if, but it is more likely to succeed than Trump's ever-escalating tariff policy that backfired.
Perhaps after dealing with 4-years of Trump's threats and bullying, we will see better cooperation from allies.
If not, at least the threat of ever-escalating trade wars under Trump will be over.
Correct Trade Policy
The best practice would be to eliminate tariffs and slash corporate taxes no matter what any other country does.
Capital and jobs would flood in.
Nonetheless, any step back from escalating trade wars and perpetual bullying is a change for the better even if far from ideal.
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