As the end of the year
approaches, it’s time to take a look backward at the year that was. In a
future column, I’ll take a look ahead at 2022.
In one important, but unfortunate, respect, it was a year where the
president kept one big promise—to give top priority to the domestic
economy and dealing with the pandemic. He did that at the expense of
dealing with trade, but it is hard to fault his priorities. Covid-19 and
the economy would be at the top of anybody’s list. The consequence,
however, was a missed opportunity—increased trade can make an important
contribution to economic growth. The administration compounded that
omission with a surprising lack of interest in increasing market access
generally, so that even when they did talk about trade, it was not
usually about improving market access and increasing exports.
Instead, they talked about labor and the environment and a trade policy for the middle class. In the past, I’ve written about
what I think of that (not much), but for a wrap-up column, the
administration should be measured by its own standards, not mine. Even
there, however, they fall short. It is fair to say that the labor
provisions of the United States-Mexico-Canada Agreement (USMCA) have
been successful thus far, although it is too early for a definitive
judgment. But those provisions were negotiated by the previous
administration, albeit with a heavy assist from Katherine Tai, the
current U.S. trade representative, and the administration so far has
done little to propagate the same ideas elsewhere, either in new trade
agreements or in
revisions to old ones.
In fact, until the Indo-Pacific Economic Framework (IPEF)
was announced in the fall, the administration has put forward few if
any other new initiatives—bilateral, plurilateral, or multilateral. It
has, however, made efforts to clean up some of the messes left by the
Trump administration, although even there the solutions sometimes kicked
the can rather than permanently resolved the problem.
The Boeing-Airbus dispute, now in its 17th year, has been temporarily
set aside, with mutual retaliation abandoned, but the fundamental
differences on subsidies still remain to
be resolved. Steel and aluminum tariffs have been worked out with the
European Union, and it is safe to assume the administration will be open
to similar arrangements with other countries to which the tariffs were
applied. But the promised broader agreement taking on Chinese steel
remains to be seen. Treasury Secretary Janet Yellen did a superb job of moving the digital tax negotiations in the Organization for
Economic Cooperation and Development (OECD) forward, and she settled the dispute with Vietnam over its currency. These are all good things, but they are clean-up, not new initiatives.
Two commendable areas of initiative are the aforementioned IPEF and the Trade and Technology Council (TTC)
with the European Union, which was their idea, not ours. The two are
similar in that they are both pale imitations of the Obama-era proposals
of a Transpacific Partnership (TPP) and a Transatlantic Trade and
Investment Partnership (TTIP). It seems clear that on trade policy, the
Biden folks are not of the “go big or go home” school, although, to be
fair, TTIP was more a victim of the European Union’s reluctance than the
United States. The modesty of IPEF, however, is clearly on us. The
widely held view in Asia is that the right move for the United States
would be to join the Comprehensive and Progressive Agreement for
Trans-Pacific
Partnership (CPTPP), and the administration’s refusal to see that
remains baffling.
Even so, these are noteworthy initiatives intended to better position
the United States vis-à-vis its two major trading partner regions. In
both cases, it is too soon to see results, but the challenge for the
administration in both will be to take the discussions beyond vague
agreements to “cooperate” and turn them into actual binding commitments
and new obligations.
The administration’s China trade policy has gotten off to a slow start. Ambassador Tai’s main speech on
the subject did not occur until October. At that time, she laid out a
short-term policy of pressing China to meet its phase one commitments,
which nobody can object to, except maybe the Chinese. Eventually, she
will have to move beyond that, and with Republicans eager to criticize
anything the administration does as too weak and undermining our
security, she has very little room to maneuver. Given the politics of
the issue, and the many non-trade issues that poison the bilateral
relationship, expectations of progress have been very low, and the
administration has met them.
So, overall, some useful initiatives have begun, and many
opportunities have been missed, but the biggest disappointment is how
long it has taken to produce very little. By September, the
administration’s response to virtually every question about trade—that
it is “under review”—had become a standing joke. The problem has not
been the review—that is routine in every new administration. It is the
time it has taken. As many people have noted, the rest of the world is
moving on, signing trade agreements, and forming new economic
relationships, and they are doing it without us. Becoming irrelevant is a
new experience for the United States, and it will not be a pleasant
one. The year that was was a year of modest beginnings. We shall see if
the year to come will be a year of meaningful conclusions.
William Reinsch holds the Scholl Chair in International Business
at the Center for Strategic and International Studies in Washington,
D.C.
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