Trade Will Be The Toughest Test For Biden’s Foreign Policy

This article first appeared in MarketWatch.

Joe Biden campaigned on a platform to restore America’s standing in the world by repairing ties with our allies, create greater domestic equity through improvements in the Affordable Care Act and aggressive efforts to advance the interests of women and minorities, and accelerate U.S. efforts to reduce greenhouse gases.

The country can’t accomplish massive new programs without big deficits or taxes a Republican Senate won’t permit. He could pay his campaign debts with surgical improvements to the ACA funded by dedicated levies, and coax Republican cooperation by offering torts reform and bending to wherever ideas the GOP may have about improving competition. And with more aggressive enforcement from the Justice Department Civil Rights Division and the regulatory powers of the Departments of Labor and Education.

Reckon with China

Internationally, Biden must reckon with a China that will soon have a larger economy, has an impressive navy, is flexing its muscles in the South China Sea and Straights of Taiwan, and suppressing democracy in Hong Kong. At best we are in a stalemate and at worst, we could be pulled into a ruinous confrontation that establishes China as the pre-eminent power in the Pacific.

France and Germany combined are as populous and about four times richer than Russia. Clearly the Europeans can afford to entirely provide for their own defense. The Europeans will be told, albeit more politely, to do much more for themselves, because America’s resources are needed in the Pacific.

China’s economy is at once complex—a state-orchestrated market system, similar to Germany and Japan in the 1930s—and simple—a free rider in the international trading system created principally by the World Trade Organization.

The WTO permitted China to accomplish export-led growth and create an economic and military juggernaut that is now bent on reshaping the entire global system to serve the values and vision of the Chinese Communist Party.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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