Explainer | The Biden Administration and Trade
Asia Society Policy Institute Vice President Wendy Cutler outlines how the Biden administration is viewing international trade policy in the first months of his presidency.
Cutler notes that the U.S. trade agenda is likely to centre around a renewed focus on multilateralism, supporting the middle class, a return to a leadership role in the World Trade Organisation, and the domestic priorities of pandemic recovery and addressing climate change.
While Katherine Tai was recently appointed as United States Trade Representative, deputies remain to be confirmed by the Senate, which has meant “the White House has been playing a central role on trade”.
“I think we have already seen some key signs which were going to give us an idea of how they are going to proceed,” Cutler says, pointing to the U.S. support for Director General Ngozi and the WTO, and a four-month suspension of tariffs with respect to the Boeing airbus dispute. “While this seems like a minor issue and I think it shows a real willingness to address bilateral irritants which I think derailed a lot of cooperation going forward”.
Cutler predicts a trade policy which is “more responsive to the concerns and priorities of the American middle class.”
“In some ways I think we can take signals from the US-Mexico-Canada agreement, the USMCA under the Trump administration, under which the house Democrats, in working with the Ambassador Lighthizer, inserted kind of novel provisions into the USMCA – making labour provisions more enforceable, increasing the rules of origins to discourage offshoring, and really lower investment protections in trade agreements.”
Cutler also agrees that China will be front and centre. She says, “I think we are going to see the Biden administration take a much more strategic approach which includes trade and technology, but also includes elements of foreign policy, visas, ideologic issues, strategic issues, people to people exchanges, a whole gamut of issues.”
She outlines a ‘collective approach’ towards China – international rulemaking, standard-setting, coordination on defence and technology – although congress may hold up fast-tracking these policies.
Regarding Indo-Pacific trade policy, Cutler says that addressing “security issues or issues regarding politics or people-to-people exchanges” won’t be effective “without a robust economic and trade agenda.” While difficult to pursue, Cutler suggests that for now “just showing up at meetings, including summit meetings and trade ministers’ meetings and other groupings, is going to be key.” Filling ambassador roles in the region and cooperating with APEC will also help.
A renewed U.S. interest in the WTO “sends an important signal to our trading partners that we are back and going to lead on reform”, Cutler says, but agrees that reform efforts will be “extremely difficult”, particularly as the consensus nature of the WTO requires agreement from all 164 member countries.
“I suspect the Biden administration will be very focused on how the WTO can contribute to a COVID recovery, to inclusive economic recovery, to how the WTO can help address climate change; also the issues surrounding the treatment and behaviour of non-market economies will be very important.”
The prospect of U.S. and Australia deepening trade ties is “excellent”, according to Cutler.
“For all the initiatives which I have mentioned in respect to regional and global issues in the trade arena, Australia is going to be a key partner if the United States Is going to be successful”, she says.
“The US and Australia share so many interests on the trade front and common values and frankly common regional challenges, that there is a robust agenda on which we can work together and bring in other countries to make this work; truly, a collective effort.”
Wendy Cutler is Vice President at the Asia Society Policy Institute and the managing director of the Washington, D.C. office.
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