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Biden's pre-Trump language on trade needs updating

Biden's pre-Trump language on trade needs updating
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Joe BidenJoe BidenLawsuit alleges 200K Georgia voters were wrongly purged from registration list GOP lawmaker blasts incoming freshman over allegations of presidential voter fraud Haaland has competition to be first Native American to lead Interior  MORE says that, if elected president, he won’t rush into any new trade agreements. What does that mean? Put aside the question of the timeline the presumptive Democratic presidential nominee has in mind. What does he mean by trade agreements? 

Biden taps well-worn themes when he talks about trade agreements. He’s focused on the middle class, and wants fully enforceable labor and environmental standards. But it’s pre-Trump language, and it needs updating. 

President Trump has upended how we think and talk about trade agreements. U.S.-China, for example, is just a cessation of tariff hostilities. It commits China to purchase things from the U.S. and evaluates compliance by looking to see if China hits its numbers. U.S.-Japan is much the same. Both deals include some broader provisions. But they are stop-gap agreements, one to walk back a trade war with China, the other to appease U.S. farmers for losing access to Japan as a result of Trump’s exit from the Trans-Pacific Partnership (TPP). 

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This type of trade agreement has gotten the U.S. in trouble before. The U.S.-Canada Auto Pact (1965) and the U.S.-Japan Semiconductor Trade Agreement (1986) come to mind. Both led Europe to ask the General Agreement on Tariffs and Trade to review their legality. In an ironic twist of fate, Europe is weighing legal action against both U.S.-China and U.S.-Japan at the World Trade Organization (WTO).

Then there’s Trump’s other approach to trade agreements. Call this the “limit trade by making it riskier” model. The strategy is to set stringent rules of origin to break up global value chains, the aim being to “re-shore” industries looking to qualify for the deal’s tariff preference. Keep national security tariffs on the table and drop investor-state dispute settlement to create more uncertainty, and you get an anti-trade agreement. This, regrettably, is much of what was had in the United States-Mexico-Canada Agreement (USMCA). There are pro-trade chapters in USMCA, like the one on health and safety standards. But in net, the text hurts more than helps trade. 

Biden has to adjust his language to account for what Trump has pulled off. It’s not at all clear whether being for or against U.S.-China, U.S.-Japan or even USMCA is to support or oppose free trade. 

Moreover, Biden’s call for patience isn’t realistic. On August 1, EU-Vietnam went into force, Europe’s 44th trade agreement. The U.S. lags by a stunning 30 – that’s right, 30 – trade deals. This puts America’s farmers, ranchers and businesses at a real disadvantage in markets around the world. You see this in the plight of Maine’s lobster industry, for example. Canadian lobsters go into Europe at zero tariff because Ottawa has a trade agreement with Brussels. The U.S. doesn’t. The exact same thing is happening to U.S. dairy. There’s only one fix, and that’s for the U.S. to sign more trade agreements, especially one with Europe.

Much of the world is also expecting a Biden presidency to provide U.S. leadership in once again opening up trade. He’d have some political latitude to do this, if he wants. That’s because Trump has created such confusion about trade deals that Biden can largely reframe the debate. He shouldn’t apologize for TPP. He has to explain to voters that TPP got larger concessions from Canada and Mexico than USMCA, and that U.S.-Japan can’t do for agriculture what TPP was sure to do. Biden has to build from there. 

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Start with intellectual property. TPP was gutted of protections for ideas after Trump left. America’s creative economy depends on them. The United States has to rejoin TPP. Biden could set the stage by insisting that U.S. participation would require a re-fresh of the deal that included more intellectual property rights. But say something new. Explain this as being about cultivating U.S. entrepreneurship. It’s about rewarding small businesses for bringing their ideas to market. 

Biden also has to take a new approach to services. In 2019, 79 percent of U.S. workers received a paycheck in a service sector. More of these sectors should be traded across borders. It’s time to reimagine services, not simply as college educated, but as the future to U.S. manufacturing as well. Services are increasingly bundled with goods. Think robotics. Liberalize services to further U.S. competitiveness in goods. 

Most importantly, a Biden model has to be more about non-tariffs than tariffs. Trump’s trade policy pivots on the view that tariffs are a source of leverage. The last four years suggest otherwise. Trump is correct that more countries should cap and cut their tariffs. But non-tariffs, like regulatory measures, do far more damage to U.S. exports than tariffs. Non-tariffs should also be the focus of Biden’s statements on trade enforcement. 

Biden can’t outdo Trump on protectionism. He also has no political incentive to try. The record level of support for free trade among Democrats, in particular, is a clear sign that things have to change. That support for free trade began to soar in 2016 is no coincidence. Biden has to update his pre-Trump language. Language will also help him explain his take on WTO reform. That’s another effort that can’t wait.   

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University, a nonresident senior fellow at the Atlantic Council and host of the podcast TradeCraft.