By sweeping all of the state primaries held in early June, Joe Biden has officially captured the delegates he needs to clinch the Democratic Party nomination to run against President Donald Trump. While no surprise after challenger Bernie Sanders conceded and endorsed Biden in April, it means that the Biden team can now put their full focus on detailing and promoting the policies that they hope will oust President Trump in November’s election.
Most political commentary in the U.S. has for months been overwhelmingly focused on the social and economic results of the global pandemic, which has hit hard on both sides of the Atlantic. More recently, the social upheaval caused by the murder of George Floyd in Minnesota and President Trump’s ham-handed attempts to involve the active duty military in quelling protests have rightfully taken center stage. As a result, discussions on trade issues have taken a very distant back seat. As business leaders struggle to re-open the world economy and reverse some of the dramatic losses caused by trade disruptions, a clear understanding of Biden’s trade agenda may be crucial to positioning companies for success in 2021 and beyond.
A completely different world from 2017
The global trade environment that a future President Biden will inherit is vastly different than what he saw on his way out of the Vice President’s offices at the end of the second Obama Administration in January of 2017. Years of unrelenting trade conflicts and protectionist measures from the current administration, as well as the pandemic slowdown and resulting recession, have reshaped the world market. Political and business relations with Europe are substantially more strained than they were previously, and Brexit has also altered the power dynamics of the EU and likely separated a staunch U.S. ally from the rest of Europe’s common market.
Transatlantic partnership renewal or a ‘restart’?
President Biden will inherit a transatlantic partnership in shambles. Over the last four years, the U.S. relationships with the EU as a whole, and with member states such as Germany, France and Sweden (lest we forget the bizarre attacks on Sweden’s immigration issues) have arguably seen their historical nadir. President Trump labeled the EU a ‘foe’ of the United States, and spent much of his administration imposing, or threatening to impose, tariffs on their key European trading partners; including a $7.5 billion dollar levy after the WTO ruled against state support in the long-running Airbus/Boeing conflict.
It seems unlikely that President Biden will be able to return the transatlantic relationship to ‘normalcy.’ Indeed, the question is whether he will even make substantial efforts in this regard considering the fragile nature of U.S. industry after the recession. Economic reality suggests that he will likely continue some version of the tough trade policies that the current administration
has embraced as a key platform. There will be little appetite for new trade deals, especially those that impact workers’ rights or the environment.
Allies are important, but Europeans don’t vote
The good news is that Biden will be more inclined to cooperation with European allies than the current administration. As a President, commentators have noted that he will continue to focus on collaborative approaches to trade problems and still believes in a non-zero sum approach to global trade. What is less certain is how his domestic constituencies will shape the direction of his eventual trade policies. The Democrats insisted on having far greater environmental and labor protections in the USCMA, and these voices will also impact how President Biden crafts the U.S. position on ongoing U.S.-EU trade agreement negotiations. Any incoming U.S. administration will continue to push for greater American business access to the European (both UK and EU) services and medical/pharmaceutical markets.
This is where the UK is in a particularly difficult negotiating position – due to Brexit, it needs to rewicker its entire trade agreement network, and is negotiating with a rather bellicose EU trade team at the same time that it is trying to ensure decent access rights to the U.S. market. Although trade talks have begun with the U.S. Trade Representative, it is highly unlikely that any agreement will be completed under the current administration’s mandate. President Biden has previously insisted that the special U.S.-UK relationship would continue under his administration, but Realpolitik looms large in this discussion. Biden knows the UK is over a barrel and he will squeeze hard to elicit whatever favorable trade and access terms he can for U.S. businesses still reeling from a post-pandemic economic downturn and in need of every advantage they can get.
China in the background, and a new global market
The changes in the global market obviously go well beyond the U.S.-EU tranche of the market – both trade partners are re-evaluating their relationship with China in the wake of a long trade conflict, China’s aggressive use of its Belt and Road Initiative to access European infrastructure projects and the changes that are still be wrought by the Covid-19 pandemic and issues of ‘nearshoring.’ Global market patterns will change as well as more companies choose to bring production facilities closer to home, or at least to diversify them away from China. As we’ve seen with the Huawei access issue, the U.S. and EU have different perspectives on the threat that China may represent to their technology infrastructure. Trump’s isolationist policies and EU competition barbs directed at U.S. technology companies have also riled the waters between Washington and Brussels.
A Biden presidency will not be able to turn the clock back to 2017, so any future relationship with the EU and UK will be based on the new realities of the global market. Does Biden present a more friendly face to European partners? Absolutely – he is an avowed supporter of NATO,
and of global rules-based organizations (which will certainly help the WTO) and has promised to work closely with European allies on global issues. However, the challenges that the U.S. will face in 2021 and beyond are obviously going to be his main concern, and as a former advisor to Democratic President Clinton said ‘it’s the economy, stupid.’ Biden’s friendly face is just that – a more reasonable and reliable partner for European allies, but one who is keenly focused on getting the best deal he can for U.S. companies and voters. His Presidency will not heal the apparent rifts over tech company taxation, competition law or any support which the EU may provide to create a ‘Fortress Europe.’ Biden’s eventual U.S. Trade Representative appointee will certainly be a savvy and pragmatic negotiator who will scratch for every bit of available market access in the EU and U.K. to benefit American constituents.
Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company focused on political risk assessment. Mr. Samson is a former U.S. diplomat and international law advisor and works at Northwestern University.