As United States President Joe Biden comes to power, are we going to get the great reset of U.S. and international trade policy that we desperately need?
So much of the world needs it, but how willing and able to deliver it is Biden?
Canadian farmers have suffered as world trade has been pummelled by the spirit of protectionism, which has been openly embraced by multiple countries. Those countries that still choose to follow the world’s trading rules find themselves lacking functional mechanisms to be able to carry on.
Biden’s principles and commitment are things we’re going to see in the next few months.
Donald Trump’s first major act as president was to rip up the U.S.’s copy of the Trans Pacific Partnership. That wasn’t good for Canada or other rules-based traders, which had hoped that deal could stand as a bulwark against China’s mercantilist and power-based approach.
Things didn’t get better. Trump refused to appoint appeal judges to the World Trade Organization, crippling its effectiveness.
The WTO is one of the only mechanisms that allows a middle power like Canada to trade with any confidence that the world’s giants, like the U.S. and China, won’t get away (too much) with abusing smaller players.
Trump also launched a stupid trade war with China, which rather than “re-shoring” U.S. manufacturing and driving industrial investment to the U.S., instead pushed China to double-down on its aggressive high-tech strategy and quicken its pace of tying up other countries in China-favourable trade agreements.
When Trump got his Phase One trade deal with China, he pushed the U.S. closer toward being a “hewer of wood and drawer of water” than it had been before. Countering China’s unacceptable investment and trade practices is essential, but this was counterproductive.
Even in terms of agriculture, China’s agreement to buy lots of U.S. soybeans doesn’t do anything to help the world supply and demand situation because if China doesn’t buy from the U.S., it’ll buy from somewhere else. However, the deal does disadvantage Canada and other competing sellers because China is now favouring U.S. soybeans over ours.
Trump’s threats to tear up NAFTA were also an existential threat to Canadian farmers. He pushed Canada’s dairy industry further into stagnation in the eventual NAFTA deal, weakening it further.
His America First belligerence perhaps propelled the Canada-E.U. trade deal forward, as each side moved quickly to lessen reliance upon the U.S. market, but that deal has been a major disappointment.
The TPP is functioning, but without the U.S., it lacks the ability to be the profound counterweight to China that its negotiators counted on it being.
What will Biden’s approach be?
He has a history as a multilateralist across the foreign policy board. He’s likely to try to keep the WTO alive, much as he is almost certain to put the U.S. squarely behind NATO, which has also been allowed to atrophy, decline and lose credibility.
Will he indulge in the kind of anti-Canada trade actions that Democrats are more likely (traditionally) than Republicans to embrace? Will he let a Democrat-controlled Congress push through the sorts of actions against Canadian wheat, pigs and cattle that we’ve suffered in the past?
Hopefully not. With any lucky, he’ll be so desirous to get Canada and the U.S.’s other semi-estranged friends back inside the U.S. orbit that he’ll eschew the attractions of the “blame Canada” game in which so many U.S. politicians have indulged.
Canadian farmers will benefit if Biden pushes ahead with at least some of his carbon reduction plans. Currently, Canadian farmers are at an increasing disadvantage in the world market versus American exporters because Americans don’t have a carbon tax. If Biden slaps one on, and it applies to farmers, Canadian farmers’ position will improve at least within North America and against U.S. exports.
If Biden uses his influence and bully pulpit to get other trade-heavy nations to embrace carbon penalties, Canada will no longer be a weird and dangerous outlier among major exporters. Perhaps the best hope with Biden is that he’ll forge a multilateral accord on carbon pricing that will stop Canada’s carbon penalties from disadvantaging Canada’s farmers.
I’m sure Biden has lots of hopes of getting a lot of constructive, multi-lateral work done. Will he get a real chance?
China could decide to just play its own divide and intimidate politics harder, with the U.S.’s ravaged credibility unable to convince many to join a U.S.-led approach.
Biden could spend all his time on the domestic economy, focused on COVID-19 and the post-COVID U.S., and allow international affairs to go by the wayside.
And the world economy, which has been statistically recovering from the early months of the pandemic, could fall into a second wave of economic crisis, which might be happening right now. Rather than a “Roaring ’20s” type comeback, the 2020s could see something like the 1970s stagnation in the advanced world.
We’ll see, and rather soon. The first 100 days of any new U.S. administration are always a relished opportunity for a new president to put his stamp on what he wants the way forward to be.
With any luck, we’ll get the Biden we need.