Trade Will Prove A Formidable Test For Biden’s Foreign Policy

Since Harry Truman, Democratic presidential candidates have run on platforms championing enlightened internationalism — leadership in free trade and security alliances — and aggressive expansion of the welfare state — most recently the Affordable Care Act.

Presumed President-elect Joe Biden will be terribly constrained. The country can’t afford massive new programs without big deficits or taxes a Republican Senate won’t permit. He will mostly pay his campaign debts with an aggressive Justice Department Civil Rights Division and the regulatory powers of the Departments of Education, Labor and the like.

Internationally, Mr. Biden must reckon with a China that will soon have a larger economy and an impressive navy.

Beijing is militarizing disputed territories in the South China Sea, threatening Taiwan and suppressing Hong Kong’s democratic freedoms.  At best we are in a stalemate, and at worst we could be pulled into a ruinous confrontation that establishes China as the preeminent power in the Pacific.

President Trump’s primary foreign policy achievement, the Abraham Accords, create a virtual alliance among Israel, Arab nations and the United States to counter Iranian mischief in the region. Mr. Biden would be foolish to upset that by re-entering the nuclear deal with Iran without substantially improved terms, which he is unlikely to obtain.

Europe is much richer and more populous than Russia and could afford its own defense. Mr. Biden could reverse Mr. Trump’s decision to reduce U.S. troops in Germany. Longer term, the Europeans will be told, albeit more politely, to do more for themselves, because America’s resources are more 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 trade system created by the GATT and the WTO.

The latter permitted China to accomplish export-led growth and create an economic and military juggernaut that is now bent on reshaping the global system to suit its brand of authoritarian capitalism.

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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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