The United States can return to multilateral economic cooperation. Here's how.
Many countries around the world are hoping that the incoming Biden administration will take the lead in restoring a cooperative multilateral approach to trade. Yet such a return to business-as-usual (pre-Trump) trade policy, focused on the negotiation of market-opening agreements, is unlikely at the start of the administration, with its stated priority of strengthening domestic competitiveness and workers' conditions to compete in the global economy.
But trade policy cannot be ignored. An active trade and investment agenda must be part of rebuilding American leadership in the world and holding together coalitions on broader forms of cooperation. In addition, the Biden team will need to undo the damage caused by the Trump administration's confrontations with US friends and allies. Trade is not a secondary issue to Biden's pledge to "build back better." Trade and international investment are critical for recovery of the US and global economies.
In the paper Getting America Back in the Game: A Multilateral Perspective, which we coauthored with Richard Baldwin, Jonathan Fried, André Sapir, and Tetsuya Watanabe, we suggest how to help get the United States back to support, strengthen, and improve a multilateral trading system. The idea is not for each country to pursue bilateral engagements in an effort to outdo others. The plan is for a multilateral approach to reinvigorate international cooperation based on two pillars: working together and formulating initiatives as "trade tracks" in broader foreign and climate policy agendas.
Working together, working with the United States
By working together, multiple countries, large and small, could put forward pragmatic initiatives to strengthen rules-based trade. Initial efforts could focus on the pressing challenges of fighting the pandemic and the economic recession. Membership in these cooperative efforts should be broad and diverse enough to be representative but small and homogenous enough to result in rapid agreement.
"Trade tracks" in foreign and climate policies
President-elect Biden has stated that on the first day of his administration, he will reverse some of the Trump administration's most damaging actions by restoring US membership in the Paris climate agreement and the World Health Organization, while also calling for a summit of the North Atlantic Treaty Organization (NATO). He should also unblock the appointment of the consensus candidate to lead the World Trade Organization (WTO), Ngozi Okonjo-Iweala. This step would reinstate direction at the highest level at the WTO and revitalize its ability to promote multilateral economic cooperation.
During the first 100 days, trade and investment tracks should be embedded in both the foreign and climate policy agendas. Renewing American leadership to mobilize global action on global threats must start not simply by mending relations with allies but also by moving away from tariff weaponization. The administration must quickly address the unilateral US tariffs—and the retaliatory duties they provoked—and stop continually threatening new tariffs on allies under the misguided claim that imports pose a risk to America's national security. Trade-related frictions, ranging from taxation to data privacy to food safety standards, will not suddenly go away, but establishing a framework and timetable to negotiate agreements on rules would help build trust.
The fight against the pandemic and recession has both domestic and international components. International cooperation is needed to expand the global supply of, and equitable access to, vaccines, treatments, and other medical equipment. A commitment to not curb exports of key medical supplies and to facilitate the movement of critical medical gear and medicines, while investing in scaling up global manufacturing capacity, would also help protect against future health crises. A pledge by the Group of Twenty (G20) countries to keep markets open could reduce uncertainty and stimulate economic activity.
While trade policy may eventually play a role in supporting the massive policy changes required to achieve the goals of the Paris agreement, early progress on environmental initiatives could come from finalizing a WTO agreement to limit fishery subsidies to avoid overexploitation of fish stocks, as well as resuming negotiation of the Environmental Goods Agreement, which seeks to eliminate tariffs on environment-related products, supporting green industries.
The Biden administration will confront three sets of trade priorities as it pursues its broader foreign policy and economic objectives. The first consists of several that require immediate attention, including developing a strategy for dealing with China. The second set is important but less immediate, including sorting out disputes on Airbus and Boeing, which have been locked for years in fights over government subsidies, and the French and other countries' efforts to impose digital services taxes. These issues are key to strengthening transatlantic relations. A third category of issues are "under the political radar" but important as signals to reengage with multilateralism. These issues would include reform of the WTO Appellate Body and current negotiations to set up rules on cross-border ecommerce and other initiatives.
The Biden administration may not make reinvigorating multilateral trade cooperation a stated urgent goal. But to achieve its key domestic and international objectives, the administration has no choice but to pursue that objective as essential to its other priorities.