Focus on US trade policies as world battles pandemic
3 min read 04 Nov 2020, 10:18 PM ISTIt is to be seen if WTO can get back to its normal functioning if Biden wins
PremiumThere is hardly any doubt that the 2020 Presidential election in the US is the most significant not just for the country but for the world as a whole since Harry Truman was elected President in 1948. Then, as now, the global economy and polity were experiencing seismic changes whose ramifications would be felt by future generations. While the late 1940s gave way to two contrasting outcomes, golden age of capitalism, and the spectre of the Cold War, the second decade of the 21st century finds itself at the threshold of a new cold war, coupled with increasing economic uncertainties.
Such an outcome is inevitable irrespective of whether the world’s largest economy looks largely blue or red. Four years of the Trump presidency has ensured that the US of the future will look more insular and more confrontational in its dealings with the rest of the world. President Donald Trump’s biggest contribution to the American imagination is captured in his twin rhetoric, “America First" and “Make America Great Again" (MAGA). It is difficult to foresee how Joe Biden can side-step these two cornerstones of Trump presidency, should he become the next occupant of the White House.
It must be said to Trump’s credit that he brought an element of transparency in the way the US has dealt with the rest of the world on economic issues. Over the past seven decades, the US has assiduously followed the “America First" strategy, beginning with the way the post-War economic governance institutions were constructed. The dominating influence of the US was encrypted into the functioning of the Bretton Woods institutions, the International Monetary Fund, and the World Bank. It may be argued that in his first term, Trump has merely sought to extend this overarching American influence on the World Trade Organization (WTO) as well.
There is no doubt that from the perspective of the US, WTO was functioning differently from the Fund and the Bank on at least two counts. One, WTO’s Dispute Settlement Body (DSB) had castigated the largest economic power for not following the agreed trade rules and, two, director-general (DG) of the Organization was decided collectively. On both counts, the Trump administration has been obstructionist. The Appellate Body of the DSB, without which disputes cannot be resolved, has been rendered non-functional for nearly a year due to US reticence on appointing new members. More recently, the appointment of the WTO DG has also run into rough weather since the US has not agreed to the appoint Ngozi Okonjo-Iweala of Nigeria as the first woman DG. The question that would be uppermost in most minds is whether a Biden administration would allow the WTO to get back to its normal functioning.
Historically, Democratic administrations have been relatively less supportive of free trade. However, over the previous two presidencies, this perception has changed radically. Trade protectionism was clearly the underlying approach during the Trump administration. In 2018, the US initiated a trade war targeting all its major trade partners, a bitter reminder of similar policies it had adopted during the dismal days of the Great Depression in the 1930s. As the global economy is struggling to overcome the worst economic slide in nearly a century, trade policies adopted by the largest economic power would be watched with interest.
What can India expect from the new administration? Personal bonhomie between the leaders of the two largest democracies aside, trade relations between India and the US have been far from ideal. Besides being drawn into the trade war, the US took India off the list of developing countries enjoying preferential market access under the Generalised System of Preferences (GSP). Possibly with a view of undoing some of the damages to its market access prospects in its largest export market, the Indian government has proposed a free trade agreement with the US. However, the Trump administration has been insisting that India must open up its market in the sensitive areas, including in agriculture. The question is, will a Biden administration also follow the same script?
Biswajit Dhar is a professor at Delhi’s Jawaharlal Nehru University.
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