News

The Trade Two-Step as Part of Biden’s Diplomatic Dance


President Biden’s new international policy is missing one big pillar: trade. The administration would like to dodge the politics; Democrats have only a narrow majority in Congress, and the party includes many economic isolationists. But America can’t afford to drop out of the competition to write the world’s new trade rules and commercial designs.

North America is an immediate opportunity. The U.S.-Mexico-Canada Agreement, the Nafta rewrite, enables Americans to challenge labor conditions in individual Mexican plants. The administration could use this power to help build honest Mexican unions—or as an excuse to block exports from America’s southern neighbor. The new infrastructure bill should include “Buy North America” procurement rules to lower costs, fight uncompetitive bid-rigging, and encourage reciprocity. U.S. and Canadian steelworkers share the same union, so they should support continental cooperation. Washington could also lower the soaring costs of home construction by removing penalty tariffs on Canadian lumber.

As companies redirect supply chains, the U.S. should make it easier to shift production from China to Mexico. Canadian railways are competing to buy

Kansas City Southern

to streamline the continent’s transport network; Mr. Biden’s team should expedite border and regulatory procedures to capitalize on such private investment.

The president knows that Central Americans will keep fleeing north if they are fearful and desperate at home. In addition to assisting with security and the rule of law, the administration should expand provisions in the U.S.-Central American free-trade agreement of 2005 that encourage the region’s cross-border investment and production with Mexico.

The U.S. will never compete economically with China in Asia if Americans don’t show up to design regional trade policies. China and 14 other countries have agreed on a Regional Comprehensive Economic Partnership that lowers trade barriers and establishes common rules of origin. Both China and Britain aspire to join the higher-quality Trans-Pacific Partnership, an 11-nation pact based on U.S. standards. But President Trump withdrew from the TPP, and Mr. Biden has shrunk from making the case to rejoin.

READ  Human life limit is between 120 and 150, according to new study

East Asians are calculating whether the U.S. has the interest—and willpower—to offer an alternative to China’s economic gravity. Mr. Trump’s tempests blew Asians away. If Mr. Biden now drifts without a compass, Asian countries will assume the U.S. is an unreliable friend. They will have to steer toward China.

The U.S. should propose a digital-trade agreement with an arc of countries ranging from Northeast to Southeast Asia. South Korea, Japan, Singapore, Vietnam, Australia and New Zealand are likely to embrace an accord that builds upon the data terms in the USMCA. Canada, Mexico and some Latin American countries might sign up, too. The higher standards should include provisions to assist small enterprises, such as e-invoices and easy digital shipments and payments.

The U.S. should also encourage post-Brexit Britain to compete globally. Mr. Biden could mobilize bipartisan support for a North American-U.K. economic pact with world-class standards for digital, service, technology and environmental topics. The president’s Democratic allies cannot honestly complain about Britain’s labor standards, and perhaps the deal could even build on USMCA practices.

The U.S. and EU need to adapt the rules of the global trading system, especially through the World Trade Organization. The Biden administration’s first impulse was to expand governmental taxing power internationally; it should balance this move with a trade multilateralism that opens doors for the growth of private industry. Washington could jump-start this process by terminating Mr. Trump’s falsified “national security” trade barriers with allies if Europeans remove their retaliatory tariffs.

The WTO’s rules and system for settling disputes have benefited American workers, consumers, businesses and farmers. But Mr. Trump wanted to kill the WTO. The WTO is now wounded and risks demise. Its new director-general, Ngozi Okonjo-Iweala, an African friend of America, needs to revive the WTO through a few practical successes. Joint statements on e-commerce and health supplies would help. An agreement on illegal fishing and subsidies would demonstrate positive connections among the environment, food and development. The U.S. could lend support by reviving the appeals system for disputes in exchange for reforms in interpreting rules and temporary safeguards for industries under stress.

READ  ‘America Is Back,’ but Europe Has Moved

U.S. Trade Representative

Katherine Tai

has said that trade should benefit workers. That is an appealing political slogan, but not a policy. A trade policy for workers should favor people, not protect old job categories. A trade policy for people should help America’s farmers and ranchers, as well as other productive workers who rely on exports and lower cost imports. A trade policy for people helps entrepreneurs and innovators, as well as their workers, to prepare for markets of the future. A trade policy for families lowers the costs of many household supplies subject to trade taxes.

Americans—and U.S. global influence—will be stronger the sooner the president recognizes that trade policy is the missing link in his global strategy.

Mr. Zoellick is a former World Bank president, U.S. trade representative and deputy secretary of state. He is author of “America in the World: A History of American Diplomacy and Foreign Policy.”

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.