Biden Trade Protectionism

There is a continuing interest in capturing the state of the current global political economy and the global economic policymaking of the major states – the US, China, India, Brazil, Europe, Japan, Korea, and others. Not surprisingly the debate is most active in the US. Experts and officials alike are intent in describing current Biden Administration policy. Most recently some experts have been labeling the global economic framework as ‘post- neoliberalism’, defining it, apparently, in contradistinction to the previous dominant policy framework – ‘neoliberalism’.  The dilemma of course is a definitional one as much as anything else  – the terms are well known, their meaning not so much. 

Recently, colleagues of mine have kicked off a discussion. One, Dan Drezner, from the Fletcher School and the Substack ‘Drezner’s World’ has waded into the policy mix, actually in an article from Reason titled, “The Post-Neoliberalism Moment”. As Dan early in the piece thought to frame first neoliberalism he suggested the following: 

The term neoliberal has been stigmatized far more successfully than it has been defined. For our purposes, it refers to a set of policy ideas that became strongly associated with the so-called Washington Consensus: a mix of deregulation, trade liberalization, and macroeconomic prudence that the United States encouraged countries across the globe to embrace. These policies contributed to the hyperglobalization that defined the post–Cold War era from the fall of the Berlin Wall to Brexit.

Dan made it clear, however, that this economic model no longer dominates: 

In the 16 years since the 2008 financial crisis, neoliberalism has taken a rhetorical beating; New Yorker essayist Louis Menand characterized it as “a political swear word.” Until recently, no coherent alternative set of ideas had been put forward in mainstream circles—but that has been changing. 

And what has been the replacement, well Dan suggests that its the politicians and officials that have been most active in leaving neoliberalism behind:

These ideas are being shaped by powerful officials. The primary difference between Biden and Trump in this area is that Trump’s opposition to globalization was based on gut instincts and implemented as such. The Biden administration has been more sophisticated. Policy principals ranging from U.S. Trade Representative Katherine Tai to National Security Adviser Jake Sullivan have been explicit in criticizing “oversimplified market efficiency” and proposing an alternative centered far more on resilience.

For elements of this policy transformation one need only look to recent Biden Administration policies including the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. As Dan concludes, the totality of these policy initiatives is: “all represent a pivot to industrial policy—a focus on domestic production.” 

In constructing this post-neoliberalism model, folks argue that there is a necessary trade-off between resilience and efficiency. As Dan suggests: “A key assumption behind post-neoliberalism is that policy makers can implement the right policies in the right way to nudge markets in the right direction.” 

Now another colleague of mine, Henry Farrell from Johns Hopkins, tries his hand at a definition in a recent Substack Post at his ‘Programmable Mutter’, titled, “If Post-Neoliberalism is in Trouble, We’re all in Trouble”. The Post partly responds to Dan, and further articulates Henry’s view of post-neoliberalism. As he describes it: 

A key assumption behind post-neoliberalism is that policy makers can implement the right policies in the right way to nudge markets in the right direction. … I see post-neoliberalism less as a coherent alternative body of thought, than as the claim, variously articulated by a very loosely associated cluster of intellectuals and policy makers, that markets should not be the default solution. … More generally, post-neoliberalism isn’t and shouldn’t be a simple reverse image of the system that it has to remake. It can’t be, not least because it has to build in part on what is already there.

The dilemma, as I see it, for understanding any of these  post-neoliberalism models, and also, though less intensely – neoliberalism, is pretty much all definitional. The base of the problem is not really understanding what ‘resilience’ and ‘efficiency’ really mean. And that in turn causes confusion over trying to then understand ‘globalization’.  And that unfortunately builds vagueness into our understanding of these economic models especially over what we are to understand to be – post-neoliberalism. 

But what isn’t so difficult to understand is the problem that has been created in this post-neoliberal period by current trade policy especially as seen in the United States. Layer it as much as you can but the Biden Administration policy is ‘protectionist’ and the Trump Administration, was, and will in all likelihood be, even more protectionist if Trump is returned to office in late 2024. As Inu Manak has written in a recent piece for the Hinrich Foundation in Australia – a foundation focused on global trade: 

Trade has become toxic, not just on the campaign trail, but in the way that it is discussed by both Democrats and Republicans. “Traditional” US trade policy, which began to form its nearly century-old roots under the leadership of President Franklin Roosevelt and his Secretary of State, Cordell Hull, has been described by US Trade Representative Katherine Tai as “trickle-down economics,” where “maximum tariff liberalization…contributed to the hollowing out of our industrial heartland. … The current US approach to trade, if it can be called an approach at all, risks weakening US influence abroad and economically disadvantaging Americans at home. It rests on the false belief that retrenchment of “traditional” US trade policy—by putting America First or catering to a select group of US workers and branding such efforts as “worker-centric trade policy”—will somehow restore the United States to a position of hegemonic dominance with no peer competitor. 

The Biden Administration’s allergy to new trade policy initiatives can be seen in its Indo-Pacific economic strategy – the IPEF – the Indo-Pacific Economic Framework for Prosperity. This framework is intended to advance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness for the fourteen countries negotiating the IPEF. The countries included are: Australia, Brunei Darussalam, Fiji India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam with the United States. The IPEF partners represent 40 percent of global GDP and 28 percent of global goods and services trade. Negotiations have proceeded well for three of the four pillars including supply chains, clean economy, and fair economy pillars but the Biden Administration has decided not to proceed in negotiating for fair and resilient trade. As William Reinsch at CSIS described the situation: 

The commentariat is busy these days debating the future of the Biden administration’s trade policy in the wake of its effective abandonment of the trade pillar in the Indo-Pacific Economic Framework (IPEF) negotiations. (The administration says the talks will continue, and I imagine they will, but I don’t see a conclusion, at least before the election.) The policy is clearly a failure at this point, …

As colleague Ryan Haas of the Brookings Institution, and a former US official – from 2013 to 2017, Hass served as the director for China, Taiwan and Mongolia at the National Security Council (NSC) staff – underscored in his examination of trade policy in the Indo-Pacific: 

These constraints will be most visible on trade. The absence of a credible trade and economic agenda for Asia has been the Biden administration’s greatest weakness. Political and national security imperatives will continue to drive the United States’ approach to trade. Do not expect any outbreak of creativity or boldness on trade by the Biden administration in 2024.

The Biden Administration failed to roll back the tariffs imposed by the Trump trade folk. It is a major failure of US trade policy and an expression of the Biden SAdministration’s trade protectionism. It bodes ill for growing the global economy and achieving productivity gains for the United States and others.

Image Credit: E-International Relations

This Post originally appeared at my Substack Post Alan’s Newsletter – https://open.substack.com/pub/globalsummitryproject/p/biden-trade-protectionism?r=bj&utm_campaign=post&utm_medium=web&showWelcome=true

 

The March of Global Order

This Post is a collaboration with Yves Tiberghien Professor of Political Science at UBC and RisingBRICSAM blogger Alan Alexandroff.both Principals at the Vision20. It underscores that key actors in Asia, Europe and elsewhere are not waiting on the United States to return to global collaboration and multilateral action.

Out of Asia there is a major push on various global governance fronts. The world is not waiting for the United States. And in fact Joe Biden, the President Elect and his people are going to have to think ‘hard’ about whether they are prepared to be ‘left behind’ in the march forward of various multilateral gatherings. Are the demands of domestic politics and the Democratic Party’s distaste for ‘free trade arrangements’ going to leave the Biden Administration lukewarm to rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP? Lukewarm leaves the United States on the outside of efforts to integrate trade and investment in Asia and beyond.

While the Regional Comprehensive Economic Partnership (RCEP) is a limited integration of trade and investment, nevertheless the RCEP is the largest regional agreement concluded in Asia. The Pact covers 2.2 billion people and 15 countries . It includes China and other major economic actors including Japan and South Korea. As the NYTimes (2020) points out:

The pact will most likely formalize, rather than remake, business among the signatory countries. Its so-called rules of origin will set common standards to determine whether a final product qualifies for duty-free treatment, potentially making it simpler for companies to set up supply chains in several different countries.

While the RCEP lacks significant and needed steps to further liberalization and common regulation in key areas such as services trade, e-commerce, intellectual property protection and the elimination of manufacturing subsidies it is a key advance for the Asian region. As pointed out by Yves Tiberghien (2020) in a just published EastAsiaForum post:

RCEP will advance the acceleration of regional economic integration in Asia, and pushes back on Trump’s strategy of decoupling of US allies from China. While Southeast Asian countries, Japan, South Korea, and Australia may all be wary of China at the moment and seek diversity in their trade relations, they simply cannot sustain their prosperity without stabilisation of trade relations with China. Asia is criss-crossed by ever intensifying value chains, and China’s still an integral part of that. Vietnam and other ASEAN countries are rising as manufacturing hubs, but that’s a process accompanied by increased imports of intermediary goods from China.

But RCEP is also of global significance. The agreement, signed off in the middle of a pandemic and US–China trade war, reminds the world, first, that East Asia countries, unlike the Americas and Europe, have broadly succeeded in controlling COVID-19. That success, across different types of political regime, with a similar respect for science, expertise, and trust in government, was accompanied by general acceptance of mask-wearing and community rules.

Second, it also reminds the world that the biggest trading group in the world economy is doubling down on the rules-based multilateral system. Research by Homi Kharas shows that most of the increase in the global middle class until 2030 will take place in China and Asia.

 

RCEP also embeds the first trilateral agreement between China, South Korea and Japan, itself a huge deal. The common interests of these three countries have over-ridden tense geopolitical relations across the Asia Pacific. RCEP underscores the pragmatic efforts of Japan to balance its strong security stance on the South China Sea and in the East China Sea with stability in the bilateral relationship with China. After the completion of the CPTPP, the EU–Japan partnership, and the US–Japan agreement, this marks the completion of the Abe trade agenda (even though Japan would have preferred India to join RCEP). …

As well, RCEP brings significant institutionalization to Japan’s economic relations with China, including a new chapter on e-commerce (with a ban on data localisation requirements), rules on government procurement, and rules on intellectual property rights that go beyond WTO rules. The same calculations drive Australia’s readiness to sign RCEP in the midst of a bitter, but hopefully short-lived, trade fight with China.

The coming Biden Administration needs to rethink its reluctance to rejoin the CPTPP. If it fails to do this it could be on the outside of growing multilateral economic integration and possibly more.

Image Credit: Vietnam News Agency, via Associated Press.

Can the G20 Maintain Progress at Osaka in Global Governance – Part One

 

 

Gathering for the G20 Osaka Summit

With this post RisingBRICSAM ‘returns to the air’. First up are the Vision 20 reflections on the impending G20 Osaka Summit. The Vision 20 principals include: Colin Bradford, Brookings, Yves Tiberghien, University of British Columbia and Alan Alexandroff, Munk School of Global Affairs & Public Policy, University of Toronto.

As we have expressed in the past, “Our ‘Visioning the Future Project’ focuses on defining the future by building a new blueprint of values and organizing principles for the global system.” The V20 is committed to a well-defined goal: a new and better articulation of the relationships between global, national, and local levels. We also emphasize new avenues for dialogue across cultural, regional, and North-South divides to avoid
a downward cycle of mutual misperceptions. The V20 has urged, principally through the Blue Reports, that G20 Leaders reach out with far greater efforts and with accessible messages that can better speak to their own publics and work to assist their publics to understand the collaborative efforts these Leaders and their officials strive to achieve through the G20.

And now to our examination of the Osaka G20 Summit.

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The Threat is Real – The Global Order and Its Travails

Donald Trump greets supporters during his election night rally in Manhattan. REUTERS/Mike Segar

Donald Trump greets supporters during his election night rally in Manhattan.

There is no doubt today about the threat to the Liberal Order.  For decades we thought the the greatest threat to the Liberal Order was posed by those outsiders, the bad Russians, Mao’s China, other authoritarian adversaries.

But we were wrong!

The election of Donald Trump as the 45th President of the United States poses the greatest challenge yet to the Liberal Order the United States and its allies built after World War II.  Gideon Rachman in the FT , yesterday, November 8th, expressed it well:

Mr Trump’s proposed policies threaten to take an axe to the liberal world order that the US has supported and sustained since 1945. In particular, he has challenged two of the main bipartisan principles that underpin America’s approach to the world. The first is support for an open, international trading system. The second is the commitment to the US-led alliances that underpin global security.

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