The Biden Presidency trade policy: implications for Australia and the world
January 21, 2021: Incoming US President Joe Biden has immediately issued Executive Orders which reverse major Trump policies over the last four years, beginning with re-joining the World Health Organisation and plans to address deadly COVID-19 pandemic, reversing his environmental agenda including re-joining the Paris Climate Agreement, cancelling his anti-immigration policies, bolstering the economy and restoring federal efforts to promote diversity.
International trade agreements didn’t feature.
President Biden has nominated Katherine Tai to be the US Trade Representative. She is a widely respected, traditional trade lawyer, fluent in Mandarin, who worked on China trade under the Obama Administration. Although committed to a free trade agenda, she has indicated that trade policy should strengthen US manufacturing and increase jobs in that sector, and strengthen the economies of US allies. She liaised with unions on the labour aspects of the new US-Mexico-Canada Agreement.
However, like Biden and the Democrat majority, Katherine Tai supports a “tough” line on China, which could continue to impact on Australia’s trade relations with China.
Trump’s legacy in trade is the degrading of the World Trade Organisation, the effort to “de-couple” from China, and damage to long-standing allies with unilateral tariffs on steel and aluminium for Canada, Japan and Europe. Trump’s term saw three of the biggest trade deficits in US history and two years of overall decline for US trade.
AFTINET advocates fair trade rules as an alternative to both the neoliberal economics which Biden still represents, and Trump-style unilateralism. Such rules should apply to all countries and potentially restrain the market domination of the most powerful players.
Trade agreements should be based on internationally agreed upon and fully enforceable labour rights and environmental standards to counter the global race to the bottom on these standards.
President Biden is likely to repair the damage to trade relations with Japan, Canada and Europe. He may also rebuild US relations at the WTO, possibly by allowing appointments to its Appeals Body,
Biden will still put US interests first, but Australia’s officials should now have a more predictable dialogue with their US counterparts than during the Trump years. Biden has also made clear that domestic issues are his first priority, so there will be no moves to new trade agreements anytime soon. Expectations that his administration will move to re-join the 11-member Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), of which Australia is a member, would also run into massive political opposition within the Democratic Party as well as Republicans.
The reality is that the COVID-19 pandemic and its associated economic shock is uncharted territory for all governments, including Australia’s. Health, economic and social problems will continue to mount during 2021. The Biden presidency is a chance for the US to use its many strengths as a positive force in the urgently needed international response to the crisis. Biden first has to craft a domestic response, and the Trump movement may well still hobble this urgent effort.
For now the Trump populist authoritarian movement remains mobilised and has been boosted by the violent attack on the Capitol Building on January 6. It is a fusion of white supremacists, conspiracy theorists, armed militias, fundamentalist Christians and big business – notably the gun and other weapons manufacturers, fossil fuel, big pharma and Wall Street. It dominates the Republican Party. Biden will have to both confront and defuse this movement if his presidency is to have a positive, democratising impact.