It pains me to write yet another column criticizing an administration I have supported from the beginning, but on trade it is increasingly clear the Biden folks have lost their way and have embarked on a path that will ultimately do more harm to our interests than good. A twenty-first century trade policy is beginning to look like the nineteenth century, where might made right and the big countries did what they wanted at the expense of
the small ones.
There are ironies here because President Biden by all accounts, as well as his own statements, is a confirmed multilateralist; yet in the trade area he continues to take steps that are not only unilateral but which undermine the rules-based system we have spent so many years defending.
Every country from time to time breaks the rules, and others are not shy about calling them out. The United States is no exception on either front, but the current and previous administrations have taken rule-breaking to a new level. The best examples are Trump’s tariffs imposed for national security reasons and those imposed on China. Some of the former don’t even pass the most basic laugh test. Not labeling Hong Kong products “Made in China” is a national security threat? Please.
The Biden administration has been marginally less obvious than that, but its affection for Buy American restrictions and discriminatory tax credits based on domestic content requirements is no less offensive and will almost certainly end up in litigation at the World Trade Organization (WTO), just as Trump’s tariffs have. One can argue that Biden’s goals are noble—creating U.S. manufacturing jobs—but in reality they are just as selfish as Trump’s. Both try to distort the trading system, not to mention market economics, to benefit the United States at the expense of everybody else. This is
hardly an example of multilateral cooperation at its best.
It is true that everybody else has tried that too from time to time, which is why we have agreed-upon international rules or guardrails to limit such conduct, and institutions, notably the WTO, to monitor and enforce the rules. The WTO in particular is noteworthy because it has a dispute resolution system that actually functions—or at least it used to until the Trump administration torpedoed it.
And that is where the Biden administration’s behavior has been even more frustrating. The United States had good reasons for killing off the WTO’s Appellate Body, but the real disappointment is that it has done nothing beyond rhetoric to reform and rebuild it. A cynic would suggest that is deliberate. Since the United States has been losing cases there, it is convenient right now to be able to appeal our losses “into the void” and thus keep on breaking the rules with impunity.
Even more unfortunate, has been the Biden administration’s textbook poor loser reaction. In the Trump cases on steel and aluminum and on Hong Kong labeling, the panels concluded that they had the authority to examine a country’s use of the Article XXI national security exception, and that in these cases the U.S. actions did not get over the bar. (Ironically, the United States made the same argument the Russians made in an earlier case brought against them by Ukraine. That didn’t work for Russia either, although in that case the panel decided that Russia’s actions were
justified.)
Sadly, the U.S. response to losing was to pick up its marbles and go home. It vigorously rejected the decision, declared that nobody could decide what was in the U.S. national security interest but the United States, and then appealed the cases into the void. Ambassador Tai has since doubled down on that logic at the February 21 Munich Security
conference:
[It is] absolutely consistent for us to be at the same time completely committed to multilateralism and the World Trade Organization as an institution and at the same time completely committed to our national security responsibilities to our own people and to our allies and to their people.
At that point, I confess I lost it, because that statement is ridiculous. The whole point of international agreements is to constrain unilateral behavior. Nations give up their right to do things to others because they don’t want others to do things to them and because they believe we are all better off as a result. It is simply not possible to say you are committed to multilateralism and its instruments at the same time you are rejecting the institution’s exercise of its responsibilities when you don’t like the outcome.
A real multilateralist in this situation would accept the result, comply with the decision, and then set about changing the rules so it doesn’t happen again. That course is difficult, but it is the only way to support the institution and the rules. Instead, the U.S. reaction not only undermines the rules, it encourages other countries to ignore them as well, which will inevitably come back to bite us when we are the victim of others’ protectionism, and we have no credibility in calling them out.
The essence of multilateralism has been the motto of Dumas’ Three Musketeers: “One for all and all for one.” The key word there is “and” not “or.” The United States seems to have forgotten that and is only interested in the second half—all for one, where we are the one.
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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