After some fits and starts, Joe Biden has emerged from a crowded field as the front‐runner for the Democratic nomination. There’s still some politicking left to go, but let’s talk about what a Biden trade policy might look like if he is elected president. In this article, I’ll consider three things: (1) What Biden has said about trade during the Democratic primary campaign; (2) what the Obama administration did on trade when Biden was vice‐president; and (3) what issues Biden would face and what he might do as president (this section is very speculative!).

During the campaign so far, Biden has said a fair amount about trade policy, with a good deal of it being positive about trade, rather that critical like Bernie Sanders. First, Biden recognizes the practical reality of the importance of trade for U.S. producers, noting that “95 percent of the customers are” outside the United States. This point doesn’t say much on the substance of trade policy, but it sets the tone, suggesting he will be seeking to promote trade rather than restrict it.

He also understands some of the fundamental flaws in Trump’s view of trade. He points out that: “Trump thinks it’s about trade deficits and trade surpluses. It’s not about that.” And: “America’s farmers have been crushed by his tariff war with China. He thinks his tariffs are being paid by China. Any beginning econ student at Iowa or Iowa State could tell you that the American people are paying his tariffs.” And he has explained more generally the harms suffered by U.S. businesses: “the idea that this trade battle makes any sense, is benefiting anybody, is absolutely ludicrous. And just ask the farmers here or around the world — I mean, around the United States, and the manufacturers. It’s killing us.”

Perhaps the most important question will be about personnel: who would President Biden put in charge of trade policy?

And although Trump is said to be taking an aggressive approach to China, Biden thinks it is not sufficient or effective: “we better figure out how we begin to write the rules of the road, not China.” And he also says this:

“We need to get tough with China.

They are a serious challenge to us, and in some areas a real threat.

And every single step that Donald Trump is taking is only exacerbating the challenge.

While Trump is attacking our friends, China is pressing its advantage all over the world.

So you bet I’m worried about China — if we keep following Trump’s path.”

Relatedly, he is critical of Trump’s treatment of our allies: we need to stop “poking our finger in the eye of all of our friends and allies,” and he ties that to China: “let’s build a united front of allies to challenge China’s abusive behavior.”

All of these statements are positive from the standpoint of support for a free and open trading system. One concern, though, is that Biden was vice‐president during the Obama administration, and the approach to trade policy taken there was not all that successful or productive. Perhaps that was due to being distracted by the financial crisis or health care fights, and then having the GOP control Congress for most of Obama’s time in office, and anyway Biden was only the vice‐president, not the president. But regardless, it did not go very well.

In The Spotlight

The Obama administration’s completion of the 12 nation Trans Pacific Partnership (TPP) talks was an accomplishment, but that was followed by a failed effort to get the TPP through Congress. And there was a much‐hyped negotiation with the EU that stalled. And there were talks with China on an investment treaty that did not get very far either. Basically, the big ticket trade policy initiatives during the Obama administration did not pay off.

During the campaign, when asked about the TPP, Biden said this: “I would not rejoin the TPP as it was initially put forward. I would insist that we renegotiate pieces of that with the Pacific nations that we had in South America and North America, so that we could bring them together to hold China accountable for the rules of us setting the rules of the road as to how trade should be conducted.” Thus, by rejecting the signature trade initiative that he lobbied for at the time, Biden himself seems to acknowledge that the Obama administration’s efforts were lacking.

With all that in mind, what would trade policy look like under a President Joe Biden? Here are a few of the questions he will face, with some speculative answers offered on some (but not all) of the points.

First of all, what would the basic scope of trade agreements be in a Biden presidency? There were clearly some flaws in the pre‐Trump model (although people disagree on what exactly those flaws were, of course), and Trump’s new model is arguably making things worse. Would Biden refine the balance in these agreements in a way that makes better policy and more successful politics? He said he would renegotiate the TPP, but what exactly would he change about it? (And how will he get Congress on board this time?)

Along these same lines, how would he implement USMCA, the renegotiated NAFTA that will be a key legacy of Donald Trump? One thing Biden might do is push for more labor enforcement. In response to demands from Democrats, the Trump administration included brand new labor provisions that, on their face, seem like they would be more enforceable in relation to labor rights than anything that has come before. People might have had doubts that the Trump administration would be enthusiastic about enforcing those provisions, but a President Biden seems more likely to do so. Another area for Biden to look at is the rules of origin for auto and auto parts trade. The Trump administration formulated these rules so as to restrict trade. A Biden administration might rethink that approach.

And finally on trade agreements, which countries would be his priority for trade negotiations? For Obama, it was the Pacific region and the EU. You can see why that would appeal to Biden as well: to repair frayed relations with allies, and to help create a united front against China. But if it didn’t work the first time, why would it work this time? The EU will be very happy to deal with Biden rather than Trump, but a successful negotiation will not be easy no matter who is in charge. Perhaps a deal with the UK will be easier, and Biden could start with that and see if it provides a model to apply to the EU. There are plenty of other trade negotiating possibilities to consider as well, as the Trump administration has started, or talked about starting at least, a number of bilateral negotiations. A Biden administration could pick up on some of those if it wanted.

There will also need to be an unwinding of some of Trump’s domestic and international trade actions. To start with, what would Biden do with the Section 232 steel and aluminum tariffs where “national security” was invoked? Repealing them immediately would go a long way towards improving relations with allies (and would offer a boost to U.S. manufacturers who use these products as inputs, as well all those exporters harmed by our trading partners’ retaliatory tariffs).

In addition, the Trump administration has been shaking things up at the WTO, sometimes helpfully (challenging countries that have become wealthier over time to take on greater liberalization commitments) and sometimes not (blocking appointments to the Appellate Body, the WTO’s appeals tribunal). On the Appellate Body issue, as things stand now, the EU is leading an effort to come up with a temporary alternative, as the Appellate Body has shut down as a result of the Trump administration’s efforts. A Biden administration could engage on this issue by agreeing to make appointments, and by setting out a clear proposal for what it would like to see in a WTO appeals mechanism (the Trump administration has criticized various aspects of the current system, but has not said what changes would be acceptable).

Perhaps the most important question will be about personnel: who would President Biden put in charge of trade policy? One thing Trump’s time in office has made clear is that having an experienced, knowledgeable, and politically savvy expert in charge of trade policy makes a difference. There will be a lot of immediate work to do on trade policy if Biden becomes president, and he needs to find someone with the skills and background necessary to handle this difficult job.

This article appeared on Cato at Liberty.
Share

Simon Lester
About The Author Simon Lester
Simon Lester is a trade policy analyst with Cato’s Herbert A Stiefel Center for Trade Policy Studies. His research focuses on WTO disputes, regional trade agreements, disguised protectionism and the history of international trade law.




Cato Institute


You don't have permission to view or post comments.

Quick Search

Stock Watch

FREE Impact Analysis

Get an inside perspective and stay on top of the most important issues in today's Global Economic Arena. Subscribe to The Manzella Report's FREE Impact Analysis Newsletter today!