My new article — Malawer. “Biden — National Security, Law and Global Trade.“ China and WTO Review (Draft) (January 20, 2021). Some excerpts are below.
It is now up to President Biden to recalibrate the American approach to trade relations, particularly with China, and the relation between trade and national security – at least in the context of applying unilateral trade measures including tariffs and trade sanctions. The widening use of tariff exclusions over the last few years and the minimal impact of Trump’s trade war on the US manufacturing growth only served to increase the dysfunction of his protectionist trade measures. Those seemingly only led to managed trade, which led to domestic cronyism.
My general prediction is that the Biden administration will most likely draw more heavily on national security to guide the US trade and tariff policies than did administrations prior to the Trump administration, but using a much more restricted and circumspect approach than that of the Trump administration. Biden will do so in a broader and more rationally realistic way than has been seen in the last four years, and the process will observe domestic and international law more rigorously. Trade policies will be neither erratic nor punitive.
However, the Biden administration will not implement trade actions immediately. It will review Sections 232 and 301 tariffs methodically. The same can be said concerning the US-China trade relations and longstanding US-EU trade relations. This review will now include the recently concluded the EU-China investment treaty as well as bilateral trade relations with the UK as a result of Brexit.
Given the much more pressing domestic, legal and policy issues currently confronting the United States (COVID-19, alliance relations, the global climate and Iran, among others), the Biden administration will need to address those issues first. In addition, the traditional lack of consensus and conflict over trade issues within the Democratic Party will hamper a broader trade review as well as a more specific review of trade-based national security actions.
The following is my partial list of trade problems confronting Biden:
- Trump’s tariff and trade wars, especially with China, raising the basic issues of confrontation or cooperative competition.
- Rebuilding alliances and a multilateral global strategy which in particular addresses trade and political disputes relating to U.S.-China relations.
- More specific China trade issues, such as China’s implementation of a Phase One agreement to purchase more U.S. products and commodities, the lifting of various 232 and §301 tariffs on Chinese exports to the United States and of various transactional sanctions, particularly on investments in Chinese firms, and issues of human rights—specifically the use of Uighurs as prison labor.
- Legislative efforts to restrict and transfer some delegated tariff authorities back to the President and perhaps to the Treasury Department.
- Trade relations with the EU and the UK after the recent Brexit deal, including the competing retaliatory tariffs resulting from the Boeing and Airbus cases, the digital taxation proposals emanating from the EU concerning global internet firms and issues concerning the newly announced EU-China investment treaty.
- The global tax avoidance of global tech firms, global e-commerce and the threatened EU digital taxation.
- WTO issues, especially the decimation of the Appellate Body by the Trump administration and the selection of a new WTO director-general.
- Other WTO issues, including the growing reliance on litigation within the WTO and the continuing failure to negotiate new trade rules.
- The Paris Climate Accord.
- Sanctions related to the Iranian nuclear deal from which Trump withdrew.
- Reconstitution of an Asian alliance and joining of the newly revised Comprehensive and Progressive TPP (CPTPP) to offset the Chinese-inspired Regional Comprehensive Economic Partnership (RCEP).
- Renewal and expansion of the Trade Promotion Authority (TPA; formerly known as “fast track authority”).
- Changes by the Trump administration to the duty-free tariff treatment of various nations under the Generalized System of Preferences (GSP).
- Reconsideration of recent trade sanctions (for example, designating Cuba a State-Sponsor of Terrorism) in the last days of the Trump administration.
The appointment of a new trade, foreign policy and national security team by Biden seems very promising. To me, the team seem seasoned, experienced, professional and pragmatic, with a mature understanding of the US and global issues and interests. However, the greatest problems now confronting the new Biden administration are domestic.
In my view, one of the first issues that the Biden administration ought to confront is the longtime delegation (since the 1930s) of trade authority from Congress to the President, particularly in the area of national security, found in various legislative enactments, especially Section 232 of the Trade Expansion Act and Section 1701 International Emergency Economic Powers Act. While it may seem counterintuitive for Biden to restrict his own authority, it is necessary to ensure that the abuse and corruption of national security cannot happen again. Recently proposed legislation by Virginia senator Tim Kaine, The Reclaiming Congressional Trade Authority Act of 2019, did not gain much traction, unfortunately. But its time has now come again.
Such restriction would be something akin to post-Watergate legislation -passed in the aftermath of President Nixon’s abuses and criminal and unethical activities – that restricted presidential powers and reasserted Congressional authority, which worked to some extent. One needs to keep in mind that Congress, not President, has the exclusive authority to regulate trade. However, since the 1780s, trade policy has increasingly been understood to have foreign policy implications. Of course, the President has extensive powers related to foreign affairs, including the ability to negotiate and withdraw from international agreements.
This balance of power between the branches needs to be recalibrated now. The direction in which the WTO has moved in cases concerning national security is not a good omen for the US. Recalibrating domestic law would most likely preclude future quite questionable US actions being contested (and ruled against) by the WTO and the global trading system. That is good for everyone. But most importantly, first and foremost, President Biden needs to revitalize American democracy in the post-Trump world.