Tag Archives: Trade Protectionism

Challenging Leadership and Stability in the Global Order

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There are some recent insights worth examining. These insights underscore the current difficulties of US leadership in the global order. There are at least three critical issues that challenge US foreign policy leadership today. These include: the ‘shadow of Trump’; the continuing primacy demand of US leadership; and the harm inflicted by current US economic policy making. All three and more undermine continuing US foreign policy leadership in a changing global order.

First there is the ‘shadow of a Trump return’ to the US presidency. As quixotic as the first Trump term was, it appears that this prior Trump term likely will be a pale shadow of how a second Trump presidency will conduct itself. There are strong indications that Trump will direct retribution on those such as the Justice Department that he believes undermined his first term as President. And there will be others. And his inconsistent nationalist-isolationist impulses will likely once again be on full display in his relations with NATO, Ukraine, Russia and China. Buckle up!  It could be very ugly. But meanwhile the shadow of his return has caused friend and foe alike to hedge their relations with the US allies, Global South and Middle Power players, and, of course, presumed foes.

So, that is one source of current harm to US leadership. Then there is the continuing determination by the Biden Administration to maintain the US sole superpower leadership role. This can also be read as the US hegemonic position in the global order. The dilemma of US leadership in a changing power order is all too evident. And it is likely to carry forward into the next administration whatever the political stripe it is.

We were alerted to this dilemma really some time ago and by none other than former National Security Advisor, H.R.McMaster. McMaster was appointed in 2017 by President Trump and after leaving office he wrote about his career in: “Battlegrounds: The Fight to Defend the Free World”. There he raised the notion of ‘strategic narcissism”. While there is some contention over whether this concept was first voiced by the great international relations theorist, Hans Morgenthau, and McMaster raises that possibility, the point is the concept itself. Morgenthau did write an essay in 1978 called, “The Roots of Narcissism,” but McMaster in his book carried the concept forward in his description of ‘strategic narcissism’. For McMaster, ‘strategic narcissism’ was:

the tendency to view the world only in relation to the United States and to assume that the future course of events depends primarily on U.S. decisions or plans.

I believe this concept and its elaboration helps us with a central concept in US foreign policy making. This framing aids us in understanding US approaches to leadership in international relations. That view was underlined in the recent piece by Ben Rhodes. It is well worth reviewing the insights provided by Rhodes in this very recent Foreign Affairs (FA) article. Rhodes has been directly involved in US foreign policy where from 2009 to 2017, he served as U.S. Deputy National Security Adviser for Strategic Communications and Speechwriting in the Obama administration. He has been close to Democratic policymaking for a long time including being close with many in the current Biden Administration. As he wrote recently in the FA piece outlining what he sees as a needed reassessment of Democratic foreign policy making:

An updated conception of U.S. leadership—one tailored to a world that has moved on from American primacy and the eccentricities of American politics—is necessary to minimize enormous risks and pursue new opportunities. … Meeting the moment requires abandoning a mindset of American primacy and recognizing that the world will be a turbulent place for years to come. Above all, it requires building a bridge to the future—not the past.

In particular Rhodes points to the Trump ability in current presidential competition to build on the negative reaction to Democratic policy making in the period after the end of Cold War and the ‘triumph’ of US leadership:

Trump has also harnessed a populist backlash to globalization from both the right and the left. Particularly since the 2008 financial crisis,

large swaths of the public in democracies have simmered with discontent over widening inequality, deindustrialization, and a perceived loss of control and lack of meaning. It is no wonder that the exemplars of post–Cold War globalization—free trade agreements, the U.S.-Chinese relationship, and the instruments of international economic cooperation itself—have become ripe targets for Trump.

And these insights also alert us to yet another weakness in the international system – the fading of multilateralism, at least formal institutions. As Rhodes points out:

Second, the old rules-based international order doesn’t really exist anymore. Sure, the laws, structures, and summits remain in place.

But core institutions such as the UN Security Council and the World Trade Organization are tied in knots by disagreements among their members. Russia is committed to disrupting U.S.-fortified norms. China is committed to building its own alternative order. On trade and industrial policy, even Washington is moving away from core tenets of post–Cold War globalization.

Even the high-water mark for multilateral action in the Biden years—support for Ukraine in its fight against Russia—remains a largely Western initiative. As the old order unravels, these overlapping blocs are competing over what will replace it.

Finally, and raised by Rhodes in his article is the Biden Administration’s turn away from free trade and access to the US market as others lower their barriers to freer trade. Protectionism has become rife under the Biden Administration guise of ‘industrial policy’ and such protectionism has been defended, I’d say promoted by Biden folks such as Jake Sullivan. As Sullivan argued early in the Administration, in fact before that in fact, he promoted quite loudly a policy for the middle class. As reported by Michigan State Representative Mari Manoogian, Sullivan urged:

In February 2021, national security advisor Jake Sullivan clearly defined the overarching theme of President Joe Biden’s foreign policy strategy as “foreign policy for the middle class.” The Chicago Council for Global Affairs contends that this Biden doctrine “recogniz[es] the linkages between American domestic strength and U.S. ability to maintain international competitiveness.” Under this new framework, foreign policy decisions, Sullivan indicated, would use the following simple rhetorical question as a basic metric for success: “Is it going to make life better, safer, and easier for working families?

But as FTs Martin Wolf has been loudly pointing out for some time in fact this is a strategy of trade protectionism cloaked within the frame of industrial policy all too frequently.  As Wolf recently wrote at his FT column:

Industrial policy works if it changes the structure of the economy in a beneficial direction. Unfortunately, there are well-known reasons why the attempt could fail. Lack of information is one. Capture by a range of special interests is another. Thus, governments may fail to pick winners, while losers may succeed in picking governments. The more money is on the table, the more the latter is likely to be true. … So, how should we assess this shift in US policy towards industrial policies, matched, on the Trumpian right, by a desire to return to the high tariffs of the late 19th and early 20th centuries?… The answer is that there are now at least three bipartisan positions: nostalgia for manufacturing; hostility to China; and indifference to the international rules that the US itself created. This, then, is a new world, one in which the international trading order could reach a breaking point quite quickly.

All of this is a dramatic threat to the stability and prosperity of the current global order.

Image Credit: E-International Relations

 

 

 

Biden Trade Protectionism

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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