-OpEd-
LIMA — I’ve written before that overall, there were reasons for believing that the new U.S. administration will be better for Latin America than the last one. Still, there is one big exception: international trade. Considering what President Joe Biden has said and done since his campaign began, we have sufficient reasons to believe that his too will be a protectionist administration.
During the election, Biden published an article in the review Foreign Affairs entitled “Why America Must Lead Again”. He wrote that the United States would not join another trade pact without first investing in U.S. citizens and preparing them to triumph in the world economy. When the U.S. was ready for more negotiations, he wrote, it would include in them union and environmental leaders.
Biden may not follow the example of his predecessor Donald J. Trump, who threatened sanctions on his European allies unless they excluded Chinese firms like Huawei from the development of their 5G networks. But it’s not because he doesn’t see firms like Huawei as a threat to the U.S. technological lead. He has also repeated charges that China is stealing American technology and intellectual property.
The reason he would not threaten his allies is because he needs them to increase his negotiating clout with China. As the new U.S. Secretary of State Antony Blinken has said, the U.S. will act in coordination with its allies, simply because when pressured to change its dubious trading practices, China will find it much harder to ignore 60% of the world’s GDP than the American share, which is 25%.
Sure, not everything a candidate says becomes public policy. We should recall, the Democrat President Bill Clinton lambasted the Republicans for being too lenient with the Chinese regime before following a similar policy when he moved into the White House. In Biden’s case, his first presidential speech on foreign policy and first decisions on trade suggest he is prepared to enact a good part of what he promised as candidate. He vowed that every action abroad must take into account the working class families inside the U.S. It seems Biden wants to recover the working classes who traditionally voted Democrat, but found a more amenable candidate in Trump in 2016.
Protecting the industries where these voters work would be politically viable because while the costs of protectionism are moderate and spread across the economy, its benefits would fall on a relatively small number of firms. And these, being few in number and fairly dependent on state protection, will have incentives to engage in lobbying to keep their protection.
On January 25, Biden signed an executive order fortifying “Buy American” legislation that favors local firms in federal government purchases. The order likely does not comply with World Trade Organization (WTO) rules for discriminating against firms not based in the U.S. This is why, as The Economist has written, “he has promised a diplomatic effort to modernise — code for weaken — the WTO rules.”
