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As Joe Biden prepares to take office as US President in January, one of the questions being asked in national capitals and in Brussels is what would a Biden presidency mean for global trade and in particular transatlantic trade?
Trump was a disruptive negotiator who re-opened and succeeded in replacing the North American Free Trade Agreement with the more-protectionist United States‐Mexico‐Canada Agreement (USMCA), withdrew the US from the Trans-Pacific Partnership (TPP) negotiations with 10 countries, as well as announcing higher import tariffs against products from China and EU countries. While he appeared to get on well with the last EU Commission President, Jean-Claude Juncker, when they discussed the idea of zero tariffs, zero non-tariff barriers and zero subsidies, no real progress was made. Trump was also supportive of Brexit and claimed he wanted to prioritise a US-UK trade deal, further irritating the EU.
The Trump administration was critical of multi-lateral international governmental organizations, withdrawing US support for the World Health Organization and the Paris Agreement on Climate Change Mitigation. At the World Trade Organization, he blocked the appointment of judges to its dispute resolution Appellate Body and has vetoed the front runner to be the new Director-General, for not being seen to be strong enough on WTO reform.
A Biden administration’s foreign policy would revert to liberal internationalism and in particular liberal institutionalism, meaning re-engagement with international governmental organisations.
A new administration will probably re-vitalise the US-EU Transatlantic Trade and Investment Partnership (TTIP). Trade policy can be viewed not only in economic terms but also as a tool of foreign policy. Both US and EU leaders viewed TTIP as not only an opportunity to increase trade and investment flows but also to cooperate to thwart the Chinese government’s ambitions to shape the agenda on global trade and finance. This desire to contain China would also see the US government seek to re-enter the re-named Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which at the last count included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, with the UK in discussions to join.
The US’s re-engagement in multilateral intergovernmental organisations means the US would probably unblock the appointment of judges to the WTO’s Appellate Body and come to an agreement on the new Director-General of the WTO.
While previous US administrations both Republican and Democrat have wanted to see the UK play a leading role in the EU, post-Brexit President Biden would want to see good relations between the UK and EU. While British Prime Minister Boris Johnson reportedly wants to use the threat of a US-UK trade agreement to pressure the EU into signing a new UK-EU trade agreement, the dynamics would change with a new US President. Biden has publicly sided with the EU on the withdrawal agreement, which commentators attribute to his Irish heritage and previous support for Irish nationalism. If a US-UK trade agreement has not been ratified before Trump leaves office, a Biden Presidency would probably weaken the UK’s hand by insisting the UK sign a trade deal with the EU, before resuming talks on a US-UK trade deal.
Trade policy is not just interlinked with foreign affairs. It also affects and is affected by other policy areas. While Biden claimed that he does not support ‘The Green New Deal’ championed by many Democrats, he has a Biden plan for the environment and has announced that the US will re-join the Paris Climate Accord. In addition, Biden may need to placate his supporters in the labour union movement meaning that the US pushing may push for labour and environmental measures in trade agreements. This may be seen as protectionism by free traders, but may also overcome some of the disagreements that prevented TTIP being ratified when President Obama was in the White House when trade/labour unions and environmental campaign organisations on both sides of the Atlantic accused each other of lower standards.
A Biden administration’s liberal institutionalism will see a re-engagement in multilateral, plurilateral and bilateral trade negotiations, with priority on larger agreements such as TTIP and CPTPP that also offer geopolitical gains. Even if a deal is not reached on TTIP, there would still be a huge amount of trade and investment flows across the Atlantic. However, with a post-Brexit UK pursuing as many trade agreements as possible and the US re-engaging in trade talks, this might encourage the EU to abandon what some Brussels commentators feared was a slide towards protectionism. Cooperation over TTIP and competition between the US and EU – as well as with the UK – to sign trade agreements could give a much-needed boost to global trade.