Trade in two stages as part of Biden’s diplomatic dance


President Biden’s new international policy lacks one major pillar: trade. The administration would like to dodge politics; Democrats have a slim majority in Congress, and the party includes many economic isolationists. But America cannot afford to withdraw from the competition to write new trade rules and trade designs for the world.

North America is an immediate opportunity. The US-Mexico-Canada deal, the rewrite of the Nafta, allows Americans to challenge working conditions in individual Mexican factories. The administration could use this power to help build honest Mexican unions – or as an excuse to block exports from neighbor to southern America. The new infrastructure bill is expected to include “Buy North America” procurement rules to reduce costs, combat non-competitive bid-rigging and encourage reciprocity. American and Canadian steelworkers share the same union, so they should support continental cooperation. Washington could also reduce soaring residential construction costs by removing tariff penalties on Canadian lumber.

As companies reorient supply chains, the United States should facilitate the shift of production from China to Mexico. Canadian railways compete to buy Kansas City Southern to streamline the continent’s transportation network; Mr Biden’s team is expected to speed up border and regulatory procedures to capitalize on these private investments.

The president knows that Central Americans will continue to flee north if they are frightened and desperate at home. In addition to contributing to security and the rule of law, the administration should expand the provisions of the 2005 United States-Central America Free Trade Agreement that encourage cross-border investment and production. of the region with Mexico.

The United States will never compete economically with China in Asia if the Americans do not come forward to design regional trade policies. China and 14 other countries have agreed to a comprehensive regional economic partnership that lowers trade barriers and establishes common rules of origin. China and Britain aspire to join the Premium Trans-Pacific Partnership, an 11-country pact based on US standards. But President Trump withdrew from the TPP and Mr. Biden has given up on pleading to return.

East Asians are weighing whether the United States has the interest – and the will – to offer an alternative to China’s economic gravity. Mr. Trump’s storms have blown Asians away. If Mr. Biden now drifts without a compass, Asian countries will assume the United States is an unreliable friend. They will have to go to China.

The United States is expected to come up with a digital trade deal with an arc of countries ranging from Northeast Asia to Southeast Asia. South Korea, Japan, Singapore, Vietnam, Australia and New Zealand are likely to adopt an agreement that relies on USMCA data conditions. Canada, Mexico and some Latin American countries could also register. The higher standards should include provisions to help small businesses, such as electronic invoices and easy digital shipping and payments.

The United States should also encourage post-Brexit Britain to be globally competitive. Mr Biden could mobilize bipartisan support for a North American-British economic pact with world-class standards for digital, service, technology and environmental topics. The president’s Democratic allies honestly can’t complain about UK labor standards, and maybe the deal could even build on USMCA practices.

The United States and the EU must adapt the rules of the world trading system, in particular through the World Trade Organization. The first impulse of the Biden administration was to extend the power of taxation of the government internationally; it must balance this development with a trade multilateralism that opens the doors to the growth of private industry. Washington could restart this process by removing Mr. Trump’s distorted “national security” trade barriers with his allies if the Europeans removed their retaliatory tariffs.

The WTO rules and dispute settlement system have benefited American workers, consumers, businesses and farmers. But Mr. Trump wanted to kill the WTO. The WTO is now injured and is in danger of disappearing. Its new director general, Ngozi Okonjo-Iweala, an African friend of America, must revive the WTO through some practical successes. Joint statements on e-commerce and health supplies would be helpful. An agreement on illegal fishing and subsidies would demonstrate positive links between environment, food and development. The United States could help by reactivating the dispute redress system in exchange for reforms in the interpretation of the rules and temporary safeguards for struggling industries.

US Trade Representative Katherine Tai said trade should benefit workers. It is an attractive political slogan, but not a policy. A trade policy for workers should favor people and not protect old job categories. A trade policy for the people should help American farmers and ranchers, as well as other productive workers who depend on cheaper exports and imports. A trade policy for people helps entrepreneurs and innovators, as well as their workers, prepare for the markets of the future. A trade policy for families reduces the costs of many household items subject to trade taxes.

Americans – and the global influence of the United States – will be stronger the sooner the president recognizes that trade policy is the missing link in his global strategy.

Mr. Zoellick is a former President of the World Bank, United States Trade Representative and Assistant Secretary of State. He is the author of “America in the World: A History of American Diplomacy and Foreign Policy”.

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8


About Author

Comments are closed.