The precarious politics of trade deals
ABOUT-FACE — The biggest diplomatic week of Joe Biden’s term appears to be unraveling before it even begins.
The president had hoped to project strength in his meeting with Chinese leader Xi Jinping on the sidelines of the Asia Pacific Economic Cooperation summit in San Francisco. For months, the administration has planned to use the event to unveil Biden’s new economic agreement for the region — the Indo-Pacific Economic Framework — showing Xi that Beijing’s neighbors are aligning with the U.S.
But domestic politics are upending that carefully choreographed program.
In recent days, the U.S. has pulled back on trade negotiations in the Indo-Pacific pact after criticism from senior Senate Democrats. Now, four officials with knowledge of the conversations say that the so-called trade pillar of IPEF is unlikely to be finished this week.
The reason? Pushback from Senate Banking Chair Sherrod Brown, who is facing a tough reelection campaign next year in an increasingly red and trade-skeptical Ohio.
Brown urged the administration late last week to drop the trade pillar altogether, saying he’d publicly oppose the entire package if it wasn’t punted. Other senior Democrats, like Sen. Finance Chair Ron Wyden (D-Ore.), soon piled on. And though IPEF isn’t subject to congressional approval, their concerns found resonance in the Biden White House, where many officials still view backlash against global trade deals as a key reason why Donald Trump won the presidency in 2016.
Brown’s comments “spooked some folks” in the administration, said an official familiar with the talks, granted anonymity because they were not authorized to speak about the matter. “People are taking the time to make sure they do right by him,” said the source. “He’s up next year.”
It’s an abrupt about-face after months of intensive negotiations — including a last minute round of talks this week — aimed at finalizing the trade pillar before the APEC summit. While most trading partners are publicly still on board with the negotiations, they’re seething behind the scenes.
The U.S. move “is quite a shock,” said one IPEF participant, also granted anonymity because they were not authorized to speak publicly. The situation now is “very, very difficult” between the trading partners, added another.
The move is already being slammed by U.S. industry groups, who point out that this is the second time in less than a decade that the U.S. has stepped away from trade talks in Asia, after former President Donald Trump walked away from the Trans-Pacific Partnership in 2017.
“It would be a terrible blow to U.S. credibility, after we negotiated and then withdrew from the TPP, if we were to do something similar with the IPEF,” said the Chamber of Commerce’s senior vice president for international policy, John Murphy. “So we need this spiral of timidity and U.S. trade policy to be brought to a halt, because it really threatens the competitiveness of U.S. companies internationally.”
To foreign policy observers, it’s all just another example of American political dysfunction that analysts say Xi will try to seize on this week. In recent weeks, the Biden administration has also pulled its support from e-commerce proposals at the World Trade Organization, a decision that split economic policymakers from the White House and U.S. Trade Representative’s office. And the entire APEC summit is taking place as congressional lawmakers struggle to fund the federal government.
All of that internal dissent, “feeds the narrative that the U.S. is unreliable and China represents an alternative,” said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, a think tank. “It’s impossible to ignore how domestic polarization here in the U.S. is impacting views of the U.S. abroad, and as long as Xi can present himself as a compelling alternative, I think unfortunately that message is going to continue to gain resonance.”
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