Over the past decades, U.S. trade policies have primarily served the interests of corporate America. The result? The American worker experienced few if any of the promised benefits of globalization. President Trump seized upon this in his bid for the Presidency in 2016, but his declaration of China as an enemy and ill-advised trade war have only widened the trade deficit he vowed to close. The data show that the trade deficit reached $67 billion in August, its highest level since August 2006. More so, job growth in the manufacturing sector has been on decline since before the pandemic. Indeed, the current deficit in manufactured goods, $84 billion, is the largest on record with data starting in 1992.
Things can and should be different in a Biden administration. First, a Biden administration must recognize that Trump’s unilateral strategy on trade has failed. Second, they must acknowledge the failures of the trade consensus that preceded the current administration. Elites shared a global consensus that dismissed labor and environmental protections in support of deals such as the North American Free Trade Agreement (NAFTA), Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP). While TPP and TTIP never passed, their intentions were clear: to create a pro-business regulatory structure that would allow industries to challenge domestic policies as illegal trade barriers.
As we have argued elsewhere, progressives need to chart a new course that reassesses patent and copyright protections that prioritize corporate interests, eliminates anti-democratic investor-state dispute settlement provisions, ensures there are clear and actionable provisions that adequately protect workers and the environment and creates a fair international system to regulate the rapidly growing tech companies. In addition, there is a need for a set of domestic policies that signals a commitment to a full employment economy. This includes robust domestic industrial policy such as Biden’s proposal on infrastructure, energy and technology which can play a major role in the reshoring of jobs and supply chains. The past four decades of trade policy have facilitated an upward redistribution of wealth, but a new balanced course is very much possible under a dedicated Biden administration.
As we persistently note, personnel is policy, and Biden’s appointments would be directly responsible for the policy outcomes of his administration. Even more so in a highly technical area like trade. Lael Brainard, the current frontrunner to lead Biden’s treasury, embodies the failed elite consensus. Working in the Clinton administration, Brainard helped implement NAFTA and usher China’s entry into the World Trade Organization, claiming it would lead to economic reforms in China. Economists have shown that the China trade shock led to job losses in exposed industries across the Midwest. Brainard also played a key part in the negotiations of the TPP and TTIP, arguing that TPP was a blueprint for future trade deals. A trade deal that sought to empower fossil fuel corporations cannot be the future in a world facing the existential threat of climate change. Joe Biden and American leaders would be wise to entrust trade policy to individuals eager to break away from the elite consensus to a true progressive vision of trade that benefits the American people.
UPDATE 10/29: Brainard’s policy positions have already distanced her from key parts of the Democratic Party with The New York Times recently reporting that “…some congressional Democrats have pointed to Ms. Brainard’s reluctance to label countries like China as currency manipulators when she was at the Treasury, and instead are pushing for Sarah Bloom Raskin, a former Fed governor and Treasury official whom they see as more aligned with their views.”