The Biden administration and its predecessor are marked more by contrasts than by similarities, but in one important area their policies have been remarkably consistent: foreign trade.
Looking forward, the past five years can be seen as a transition point between the free trade policies adopted by presidential administrations from George HW Bush to Barack Obama and a more rigorous approach.
One of the proponents of the latter is US Trade Representative Katherine Tai, who has argued that the ideal of free trade has created too many imbalances, left too many behind, and produced too much unnecessary risk.
Commenting on Tai’s views, Stephen Olson of the Hinrich Foundation, an organization that promotes “sustainable global trade”, writes: “Worse still, the unbridled pursuit of free trade has led some countries to seek to profit by actively engaging in a race to the bottom on labor and environmental standards, further aggravating problems that trade openness agreements have failed to address.
“We have to turn the page of the old playbook,” Tai says.
Tai advocates “bringing new and relevant energy to the way we trade, to thinking about trade and business relationships, and these [trade] organizations, not only as instruments of trade liberalization.
Apples are a particularly big trade issue in the world of agricultural products. The American industry is chagrined by India’s 70% tariff on American apples.
Although India imposes a 50% tariff on all imported apples, the additional 20% is in retaliation for US restrictions on Indian imports of steel and aluminum imposed in 2018.
The US apple industry exports about a third of its crop, or $1 billion in value, each year.
India was one of the fastest growing markets before tariffs.
(For a discussion of protectionism in India, see here.)
Olson points to three major implications of the Biden administration’s policy.
1. US trade policy will not be conducted on its own as it has in the past. Instead, trade policy will be closely linked to foreign policy, industrial policy, technology policy, environmental policy and domestic social policy, including issues such as gender equality and gender equality. inclusiveness. . . . Beyond all possible merits, this will greatly complicate trade relations and may even deter some countries from engaging more deeply with the United States on trade.
2. The United States will not re-enter the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) without significant changes to the agreement, which would include labor and environmental provisions.
3. There is nothing in Tai’s business vision that should generate optimism about a dramatic improvement in trade relations with China,” Olson adds. In short, expect a continuation of the status quo.
Complete free trade between nations could never be fully implemented in practice, but it served as the ideal towards which the world was supposed to strive.
Although the developing US approach can complicate thinking about free trade, these complications can correspond more closely to realities.