Trade
Biden on trade: same policy, different tone?
Author: Bryan Mercurio, CUHK
US President Donald Trump has changed the direction of trade discussions in the United States and the impact of his term in office will continue to influence policy throughout President-elect Joe Biden’s term. Biden’s policies naturally align with those of Trump’s and to some degree will simply pick up from where Trump finishes.
Domestic issues, such as middle-class incomes, jobs and manufacturing will remain at the centre of trade policymaking. Biden is an economic nationalist, emphasising the need for enhanced ‘Buy American’ policies, domestic manufacturing and preparedness for future health pandemics. But Biden will seek to re-engage the international community and reclaim the United States’ position at the top. Biden is a multilateralist and as a senator demonstrated deep interest in global relations. Biden is likely to view trade through the prism of foreign policy and will review Trump’s trade measures to uncover their effectiveness — including tariffs, export controls, sanctions, national security exceptions, trade remedy investigations and antagonism towards the World Trade Organization (WTO).
Trade is a historically combative issue in US politics, and Biden will proceed with caution and would be wise to approach the issue holistically. He can start with domestic policies including innovation and tax, and then link trade to broader economic and geopolitical objectives. Trade measures alone simply cannot reshape the domestic economy or deliver for many middle-class voters. By viewing trade as part of a broader policy, Biden could gain the space needed to formulate a modern and progressive trade policy.
Biden’s trade policy may take time to emerge as his nominee for US Trade Representative Katherine Tai could take months to be confirmed and Trade Promotion Authority (TPA) expires in July 2021. The administration must also obtain congressional support for its trade policy. Biden will have to reach a balance between trade liberalisation with domestic priorities and contemporary trade-related issues which interest members of Congress, including opposition to investor-state dispute settlement, digital trade, currency manipulation, climate change, labour and gender. Biden will also have to decide whether to continue using unilateral national security measures under Section 232 of the Trade Expansion Act , particularly against allies and partners.
Re-joining the Trans-Pacific Partnership (TPP) would signal that the United States is ready to regain its leadership role and respond to the recently signed Regional Comprehensive Economic Partnership (RCEP) between ASEAN and five partner countries, including China. But Biden has not made re-joining the agreement a priority given the difficulties he will face garnering support for the move.
Biden could seek to create an enhanced and renamed agreement, allowing him to enter the TPP through a backdoor. He could emulate President Trump who harshly criticised the North Atlantic Free Trade Agreement but essentially rebranded it the United States–Mexico–Canada Agreement. But the strong and growing support for protectionism among Democrats and aversion to free trade policies among Republicans may make the negotiation of a mega-regional trade agreement difficult if not impossible.
It is expected that the Biden administration will be constructive and re-engage with the multilateral trading system through the WTO. Biden could seek to regain US leadership status with simple moves — starting with allowing the appointment of Ngozi Okonjo-Iweala as Director-General. Biden should also allow for appointments on the Appellate Body, effectively incapacitated since the United States began blocking all new appointments. Discussions could focus on completing niche but difficult agreements, such as on fisheries subsidies, e-commerce and environmental goods.
China will continue to feature prominently in US trade policy, with the incoming administration sharing Trump’s concerns over China’s use of subsidies, industrial overcapacity, state-owned enterprises and national security. President Trump’s trade war with China included unilateral tariffs, bans and eventually a so-called ‘phase one’ trade deal which includes purchase commitments and other areas of managed trade.
Biden will continue this tough stance but take a more multilateral approach in engaging with China. Biden will seek to develop a cooperative approach with allies. He will seek to reform the rules on subsidies and other issues at the WTO to create what it…
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
Trade
WTO ministerial trading in low expectations and high stakes
The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.
The World Trade Organisation’s 13th Ministerial Conference
The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.
Challenges in Dispute Settlement and Agricultural Trade Reform
However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.
Geopolitical Tensions and the Future of Trade Relations
The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.
Source : WTO ministerial trading in low expectations and high stakes
Trade
Getting Vietnam’s economic growth back on track
Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.
Vietnam’s Economic Roller Coaster
After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.
Trade Performance and Monetary Policy
Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.
Challenges and Prospects
Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.
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